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What Are the Three Types of Contingent Liabilities?

GAAP (generally accepted accounting principles) recognizes three categories of contingent liabilities, namely probable, possible and remote. Probable contingent liabilities can be reasonably estimated and has to be reflected in the financial statements. Possible contingent liabilities are as likely to occur as not and need only be disclosed in the footnotes of financial statement. Remote contingent liabilities are extremely unlikely to occur and do not need to be included in financial statements.