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Contingent Liabilities

The term ‘Contingent liability’ can be defined as

(a)     A possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise

(b)     A present obligation that arises from past events but is not recognized because:

(i)       It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation

(ii)     A reliable estimate of the amount of the obligation cannot be made.

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