Contingent Assets & Liabilities Video Lecture - CA Foundation

what is a contingent I said like I said
a contingent asset is an asset it is a
possible asset it is not yet innocent it
may become an asset only happening or
the non happening of some future event
so it is a possible asset not certain it
is not certainly if it was an asset it
would have been there in my financial
state so I know about a machinery I know
bata furniture but this is made I may
have an asset in future due to some past
events which may give me some income in
future for example if there is a
litigation if there is some legal case
which we have taken against any of our
suppliers and we if we expect to win the
case if we win the case in future we
would get some compensation but on the
other hand we do not know whether we
will win the case or we will not win the
case so if we do win the case on the
happening of our decision in favor of us
in that case we there could be an
essence so such is a contingent asset
but having said this we have already
done a couple of sense standards like
the a couple of concepts let me say like
the conservatism concept and the
realization concept what does a
conservatism concept say or the prudence
concept say it says that any future
losses if we anticipate future losses we
should provide for them but if we
anticipate incomes we do not recognize
them till it is actually realized even
our realization concepts that any
revenue can be recognized only when it
is actually realized so we are food and
if we expect an asset to come in future
we do not disclose it in any
we do not recognize it NS an asset not
any economic benefit as an income till
it becomes a certain BP once it becomes
a certainty is no longer a contingent
Iser it is Earth it is a proper asset so
it is not recognized it does not appear
in the financial statements this closure
is it required to be disclosed no it
does not have to be disclosed in the
financial statements it is however in
case of a company it is disclosed in the
report of the Board of Directors it can
be disclosed in the report of the
approving authority of authority which
approves the financial statements so a
node may be weighed in the report of the
board of the directors but otherwise it
is not disclosed in the financial
statements and as I said before if an
outcome is certain then it actually
becomes an asset and we recognize it as
an asset well such change occurs when it
becomes a certain ad so what is a
contingent asset a contingent asset is
an asset which may arise in futures are
possible as a probable asset and I said
which may or may not arise on the
happening or non happening of some
future event there could be possibility
of an income in future but we are not
certain since we always eluded following
the concept of conservatism we do not
recognize such I said we do not
recognize such income till we are more
or less once it is certain then it
becomes an asset it is no longer
contingent so it is not recognized it
does not come in the financial stations
nor is a separate disclosure required in
the financial statements