Contingent Asset & Liability

Contingent Asset & Liability

Contingent Asset

Is a possible asset that may arise from a future event, and that is not under the business's control. Its be realised asset only after it becomes certain. 

Eg. A lawsuit filed against a competitor for infringement of design/trademark, and chances of getting one crore as compensation. 

Contingent Liability

Is a potential liability that may or may not occurred. It will be recorded only after the occurrence.

Eg. A lawsuit filed against central sales department, as a penalty notice is raised by the sales department against the company for not to file sales return properly, and there is a chance to get a penalty of 5% of total sales revenue.