AccountingHub
C1

Three kinds of owing

Not every obligation is known with certainty. How sure you are decides how it is reported.

Known

Amount and payee are certain — record it.

Estimated

Certain to exist, amount is a best estimate — record it.

Contingent

Depends on a future event — record, disclose, or nothing, by likelihood.

A is judged by how likely it is to become real. Probable and estimable: record it as a liability. Reasonably possible but not probable: disclose it in the notes. Remote: nothing at all.

The is a reminder that classification is about timing, not just certainty — a loan due next year moves into , even though the rest of it stays long-term.