Answer :
A balance sheet should be in the financial statement if a contingent liability is remote as well as not estimable.
The obligation shouldn't appear on the balance sheet if the potential loss is remote or has a probability of less than 50%. Contingent liabilities that are uncertain before their value may be established should be reported in the financial statements' footnotes. If a contingent liability is both probable and inestimable, it is both likely to happen and unknowable. Financial statements must include a note disclosure in this situation, but a journal entry and financial recognition shouldn't happen until a reasonable estimate is achievable.
A contingent liability is an obligation that might materialize in the future, such as paying out on product warranties or paying out on pending legal claims.
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