Close Management

Contingent Liability Assessment Template

Evaluate potential liabilities from pending litigation, claims, or other contingencies to determine appropriate accounting.

How to use this template

1

Obtain litigation summary

Request from legal counsel a summary of all pending or threatened litigation and claims.

2

Assess probability

Evaluate whether an unfavorable outcome is probable, reasonably possible, or remote.

3

Estimate loss amount

Determine the range of potential loss and the best estimate if probable and measurable.

4

Determine accounting treatment

Record a liability and expense if probable and measurable, otherwise evaluate disclosure requirements.

Why use this template

  • Ensures contingent liabilities are properly accounted for under ASC 450
  • Prevents understated liabilities in the balance sheet
  • Provides required disclosures for litigation and claims
  • Supports management assertions on liabilities

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