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What Are Examples of Contingent Liability?

A pending lawsuit is a common contingent liability example because its outcome is unknown. However, if a company's legal department thinks that the rival firm has a strong case, which means the contingent liability is probable, and they can estimate the loss, then the firm posts an entry on the balance sheet to account for the legal expenses as an accrued expense. A warranty is another common contingent liability because the number of products returned under a warranty is an unknown.