Contingent employers' liability in Canada refers to a situation where an employer may be held liable for the actions or negligence of a third-party contractor or employee when a worker is injured while performing duties related to their work. This liability arises when an employer has not directly hired the individual but still maintains a level of responsibility due to the nature of the work arrangement. It can involve complex legal considerations, including the degree of control the employer has over the worker and the terms of any contracts involved. Employers are advised to have proper liability insurance to mitigate potential risks associated with such situations.
There is no difference between Contingent Liability and Off Balance Sheet Liability.
the Journal entry for the above isRelated Expinditure DrContigent liability CR
Contingent liabilities are not added to total liabilities but shown as a note to financial statements that these are the liabilities that are contingent on certain event
Contingent liability can impact earnings because it is a projected and future liability. Not knowing what the outcome of the liability is, it can unexpectedly affect a large amount of earnings.
There is no journal entry for contingent liability because contingent means which is not occurred and not sure that when will that liability will be created or liability is depended on certain event that's why contingent liability is shown under financial statements notes as contingent liability.
A contingent liability is recorded in financial statements or books of accounts only if it is a probable contingency and if the liability amount can be estimated. No need to make a journal entryÊif the contingent liability is possible but not probable.Ê
Under current liability of uncertain amount liability is created on company although actual amount is unknown but in contingent liability, liability is not created on company unless specific date or time or occurence of any contingent action or activity.
Contingent liability is not shown in balance sheet because the actual occurance or amount of liability is unknown until some specific future time or event that's why it is shown as note in notes to financial statement section.
Contingent liability is not shown in financial statments until it if considerably clear that liability will be happend and until that time it is shown as a note in notes to financial statement section.
A potential liability that arises from a past transaction and is dependent on a future event.
assets
Yes, the letter of credit are to be shown as Contingent Liability. As the occurrence of this liability depends on the happening or non happening of uncertain future event.