"reasonably estimable. It may or may not occur. Contingent liability Contingent liabilities are liabilities that may be incurred by an entity depending on the outcome of an uncertain future event such as the outcome of a pending lawsuit. These liabilities are not recorded in a company's accounts and shown in the balance sheet when both probable and reasonably estimable as 'contingency' or 'worst case' financial outcome. A footnote to the balance sheet may describe the nature and extent of the contingent liabilities. The likelihood of loss is described as probable, reasonably possible, or remote. The ability to estimate a loss"
"past events but whose existence will only be confirmed by the occurrence of future events that are not in the entity's control. It establishes that contingent assets and liabilities are not to be recognized in the financial statements, but are to be disclosed where an inflow of economic benefits is probable (assets) or the chance of outflows of resources is not insignificant (liabilities). In 2010 the IASB released an exposure draft of amendments to IAS 37 and invited comments on the draft. As of April 2012, the project has been paused pending other discussions. The amendments were controversial for setting"
"Liability (financial accounting) In financial accounting, a liability is defined as the future sacrifices of economic benefits that the entity is ""obliged"" to make to other entities as a result of past transactions or other ""past"" events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future. A liability is defined by the following characteristics: Liabilities in financial accounting need not be legally enforceable; but can be based on equitable obligations or constructive obligations. An equitable obligation is a duty based on ethical or moral"
"under a duty to mitigate his loss"", citing ""Sotiros Shipping Inc v Sameiet, The Solholt"". If a party provides notice that the contract will not be completed, an anticipatory breach occurs. Damages may be general or consequential. General damages are those damages which naturally flow from a breach of contract. Consequential damages are those damages which, although not naturally flowing from a breach, are naturally supposed by both parties at the time of contract formation. An example would be when someone rents a car to get to a business meeting, but when that person arrives to pick up the car,"
"order, administration, and voidable transactions). But it is also the only test used for the purpose of the wrongful trading rules, and director disqualification. These rules potentially impose liability upon directors as a response to creditors being paid. This makes the balance sheet relevant, because if creditors are in fact all paid, the rationale for imposing liability on directors (assuming there is no fraud) drops away. Contingent and prospective liabilities refer to liability of a company that arise when an event takes place (e.g., defined as a contingency under a surety contract) or liabilities that may arise in future (e.g.,"
"provide for the future liability for claims which have occurred but which have not yet been settled. An insurance policy provides, in return for the payment of a premium, acceptance of the liability to make payments to the insured person on the occurrence of one or more specified events (insurance claims) over a specific time period. The occurrence of the specified events and the amount of the payment are both usually modeled as random variables. In general, there is a delay in the insurer's settlement of the claim, typical reasons are (i) reporting delay (time gap between claims occurrence and"
"uncertain future event either does or does not happen, they are said to have agreed to a resolutive condition (or condition subsequent). The continued existence of the contract depends on the event happening or not happening, as the case may be: for example, ""I shall buy and give you a car on the condition that, if you fail your exams, I will take the car back."" Another example would be a contract of sale whereby one sells a car on the condition that, if the buyer fails to pay the price by a certain date, it will be repossessed. A"
"mathematically calculable or are subject to a contingency which makes the amount of damages uncertain. For example, suppose Neal Townsend agrees to lease a store-front to Richard Smith, from which Richard intends to sell jewellery. If Townsend breaches the contract by refusing to lease the store-front at the appointed time, it will be difficult to determine what profits Smith will have lost because the success of newly created small businesses is highly uncertain. This, therefore, would be an appropriate circumstance for Smith to insist upon a liquidated damages clause in case Townsend fails to perform. In the case of construction"
"avoided the cause or diminished the result of liability (e.g., but for the earthquake, the old, poorly constructed building would be standing). However, foreseeable results of unforeseeable causes may still raise liability. For example, a bolt of lightning strikes a ship carrying volatile compressed gas, resulting in the expected explosion. Liability may be found if the carrier did not use reasonable care to protect against sparks—regardless of their origins. Similarly, strict liability could defeat a defense for an ""act of God"" where the defendant has created the conditions under which any accident would result in harm. For example, a long-haul"
"The term ""reserve"" can be a confusing accounting term. In accounting, a reserve is always an account with a credit balance in the entity's Equity on the Balance Sheet, while to non-professionals it has the connotation of a pool of cash set aside to meet a future liability (a debit balance). In the International Financial Reporting Standards (IFRS), the treatment of provisions (as well as contingent assets and liabilities) is found in IAS 37. A provision can be a liability of uncertain timing or amount. A liability, in turn, is a present obligation of the entity arising from past events,"
"Statutory liability Statutory Liability is a legal term indicating the liability of a party who may be held responsible for any action or omission due to a related law that is not open to interpretation. Although the term is a generic one and can apply to almost any field, it is typically used in finance as a reference in cases such as real estate transactions, shareholder obligations, or management behavior. It may also cover occupational health and safety laws, environmental laws, and employment laws. In some nations, such as New Zealand and Australia, business can purchase statutory liability insurance to"
"Actuarial reserves An actuarial reserve is a liability equal to the actuarial present value of the future cash flows of a contingent event. In the insurance context an actuarial reserve is the present value of the future cash flows of an insurance policy and the total liability of the insurer is the sum of the actuarial reserves for every individual policy. Regulated insurers are required to keep offsetting assets to pay off this future liability. The loss random variable is the starting point in the determination of any type of actuarial reserve calculation. Define formula_1 to be the future state"
"Current liability In accounting, current liabilities are often understood as all liabilities of the business that are to be settled in cash within the fiscal year or the operating cycle of a given firm, whichever period is longer. A more complete definition is that current liabilities are obligations that will be settled by current assets or by the creation of new current liabilities. Accounts payable are due within 30 days, and are paid within 30 days, but do often run past 30 days or 60 days in some situations. The laws regarding late payment and claims for unpaid accounts payable"
"case, a music hall was burned down by act of God before a contract of hire could be fulfilled, and the court deemed the contract frustrated. In other contracts, such as indemnification, an act of God may be no excuse, and in fact may be the central risk assumed by the promisor—""e.g.,"" flood insurance or crop insurance—the only variables being the timing and extent of the damage. In many cases, failure by way of ignoring obvious risks due to ""natural phenomena"" will not be sufficient to excuse performance of the obligation, even if the events are relatively rare: ""e.g.,"" the"
"Contingent claim In finance, a contingent claim is a derivative whose future payoff depends on the value of another “underlying” asset, or more generally, that is dependent on the realization of some uncertain future event. These are so named, since there is only a payoff under certain contingencies. Any derivative instrument that is not a contingent claim is called a forward commitment. The prototypical contingent claim is an option, the right to buy or sell the underlying asset at a specified exercise price by a certain expiration date; whereas (vanilla) swaps, forwards, and futures are forward commitments, since these grant"
"Deferral A deferral, in ""accrual accounting"", is any account where the asset or liability is not realized until a future date (accounting period), e.g. annuities, charges, taxes, income, etc. The deferred item may be carried, dependent on type of deferral, as either an asset or liability. See also accrual. Deferrals are the consequence of the revenue recognition principle which dictates that revenues be recognized in the period in which they occur, and the matching principle which dictates expenses to be recognized in the period in which they are incurred. Deferrals are the result of cash flows occurring before they are"
"be more properly called allowances). AACE International has defined contingency as ""An amount added to an estimate to allow for items, conditions, or events for which the state, occurrence, or effect is uncertain and that experience shows will likely result, in aggregate, in additional costs. Typically estimated using statistical analysis or judgment based on past asset or project experience. Contingency usually excludes: Some of the items, conditions, or events for which the state, occurrence, and/or effect is uncertain include, but are not limited to, planning and estimating errors and omissions, minor price fluctuations (other than general escalation), design developments and"
"is breached by a party that knows - or is imputed to know - that ordinary expectancy, reliance, or restitution damages will not suffice to meet damages caused by the breach. Consequential damages Consequential damages, otherwise known as special damages, are damages that can be proven to have occurred because of the failure of one party to meet a contractual obligation. They go beyond the contract itself and into the actions that flow from the failure to fulfill. The type of claim giving rise to the damages can affect the rules or calculations associated with a given type of damages,"
"Accrued liabilities Accrued liabilities are liabilities that reflect expenses that have not yet been paid or logged under accounts payable during an accounting period; in other words, a company's obligation to pay for goods and services that have been provided for which invoices have not yet been received. Examples would include accrued wages payable, accrued sales tax payable, and accrued rent payable. There are two general types of Accrued Liabilities: Routine and recurring Accrued Liabilities are types of transactions that occur as a normal, daily part of the business cycle. Infrequent or non-routine Accrued Liabilities are transactions that do not"
"For instance, who carries the obligation to rebuild after a casualty (natural disasters included) or whether the tenant must continue paying rent should the property be condemned? In other instances, certain risks (e.g. fluctuations in property taxes) cannot be completely accounted for in the initial contract, forcing the landlord to estimate these costs early on. In this scenario, if the landlord's accountant does not follow through with changing the invoices appropriately, it may cost the landlord thousands of dollars by the end of the taxable year. Although NNN lease investments carry relatively low risk, they require high levels of oversight"
"protect from the fines and legal fees that can result from this breach. Statutory liability Statutory Liability is a legal term indicating the liability of a party who may be held responsible for any action or omission due to a related law that is not open to interpretation. Although the term is a generic one and can apply to almost any field, it is typically used in finance as a reference in cases such as real estate transactions, shareholder obligations, or management behavior. It may also cover occupational health and safety laws, environmental laws, and employment laws. In some nations,"
"it is not there. General damages would be the cost of renting a different car. Consequential damages would be the lost business if that person was unable to get to the meeting, if both parties knew the reason the party was renting the car. However, there is still a duty to mitigate the losses. The fact that the car was not there does not give the party a right to not attempt to rent another car. To recover damages, a claimant must show that the breach of contract caused foreseeable loss. ""Hadley v Baxendale"" established that the test of foreseeability"
"Consequential damages Consequential damages, otherwise known as special damages, are damages that can be proven to have occurred because of the failure of one party to meet a contractual obligation. They go beyond the contract itself and into the actions that flow from the failure to fulfill. The type of claim giving rise to the damages can affect the rules or calculations associated with a given type of damages, including consequential damages (e.g., breach of contract versus a tort claim). For example, consequential damages are a potential type of expectation damages which arise in contract law. When a contract is"
"and crediting a liability, which means that both increase. When cash is withdrawn from a bank, the opposite happens: the bank ""credits"" its cash account and ""debits"" its deposits account. In this case, the bank is crediting an asset and debiting a liability, which means that both decrease. Liability (financial accounting) In financial accounting, a liability is defined as the future sacrifices of economic benefits that the entity is ""obliged"" to make to other entities as a result of past transactions or other ""past"" events, the settlement of which may result in the transfer or use of assets, provision of"
"occurs without a request, from the date of the tort. If the debtor is in default, he must pay damages even if the performance becomes impossible for reasons for which he is not responsible unless he can prove that the creditor would have suffered the loss/damage also in case of a timely performance. The damages due to a default encompass the suffered damages as well as any lost profit, provided that the suffered damage is directly linked to the default and the profit could be expected under the contract. If the debtor did not act in good faith, he is"
"event must be uncertain. The uncertainty can be either as to when the event will happen (e.g. in a life insurance policy, the time of the insured's death is uncertain) or as to if it will happen at all (e.g. in a fire insurance policy, whether or not a fire will occur at all). Insurance contracts were traditionally written on the basis of every single type of risk (where risks were defined extremely narrowly), and a separate premium was calculated and charged for each. Only those individual risks expressly described or ""scheduled"" in the policy were covered; hence, those policies"
"is a liability, such as cash received from a counterpart for goods or services that are to be delivered in a later accounting period. When such income item is earned, the related revenue item is recognized, and the ""deferred revenue"" is reduced. It shares characteristics with ""accrued expense"" with the difference that a liability to be covered later is an obligation to pay for goods or services received from a counterpart, while cash for them is to be paid out in a later period when its amount is deducted from ""accrued expenses"". For example, a company receives an annual software"
"seen as an ""important development"" in accounting as it regulated the use of provisions, minimising their abuse such as in the case of big baths. IAS 37 establishes the definition of a provision as a ""liability of uncertain timing or amount"", and requires that all the following conditions be fulfilled before a provision can be recognized: The standard also details measurement methods for provisions, generally requiring that the entity recognises a best estimate of the amounts needed to settle the obligation. Contingent assets and liabilities IAS 37 generally defines contingent assets and liabilities as assets and liabilities that arose from"
"liabilities. There are often disclosure requirements for potential liabilities and assets that are not actually recognised as an asset or liability. If an item in the profit and loss account is never chargeable or allowable for tax or is chargeable or allowable for tax purposes but never appears in the profit and loss account then this is a permanent difference. A permanent difference does not give rise to deferred tax. If items are chargeable or allowable for tax purposes but in different periods to when the income or expense is recognised then this gives rise to temporary differences. Temporary difference"
"liability to be covered later is an obligation to pay for goods or services received solo ""from a counterpart"", while cash for them is to be paid out in a later period when its amount is deducted from ""accrued expenses"". For example, a company receives an annual software license fee paid out by a customer upfront on the January 1. However the company's fiscal year ends on May 31. So, the company using accrual accounting adds only five months worth (5/12) of the fee to its revenues in profit and loss for the fiscal year the fee was received. The"
"occurrence of an event. For example: ""When X reaches the age of 25, he no longer has the right to live in Y"" (the fact that it is incertain whether or not he will reach this age makes this a ""conditio"" and not a ""dies"" as ""dies incertus pro conditio habetur"". A suspensive condition is one where there is no duty to pay unless the event happens. This was very useful. It could be used to create a penalty clause, concentrating the mind on performance because if the building was not built you would have to pay money. It also"
"no other customer's future sales are ""reasonably likely to occur."" Speculative damages Speculative damages are damages claimed by a plaintiff for losses that may occur in the future, but are highly improbable. They can not be used as a basis for recovery in tort or contract cases. Example: A plaintiff claims the tortfeasor's failure to deliver a shipment not only hurt his current sales, but also customer satisfaction and thus future sales as well. There is, however, one way that speculative damages can be recovered. If the plaintiff can prove that the speculative damages are reasonably likely to occur, he"
"important: If, then, the warranty is not based on a “representation,” or “failure to disclose” or “non-disclosure,” the insurer will still be able to avoid liability under the contract. As a general rule, the words “representation,” “failure to disclose” and “non-disclosure” refer to existing facts as well as to future events. The controversy of granting damages for misrepresentation of a future event has generally been removed by statutory reform. The question of materiality is of assistance here. Subrogation is the right of the insurer, having indemnified the insured in terms of the policy, to receive the benefit of all the"