A current liability is susceptible to precise measurement because the date of payment, the payee, arid the amount of cash needed to discharge the obligation are reasonably certain. There is nothing uncertain about
- The fact that the obligation has been incurred and
- The amount of the obligation.
A contingent liability is an obligation that is dependent upon the occurrence or nonoccurrence of one or more future events to confirm the amount payable, the payee, the date payable, or its existence. It is a liability dependent upon a “loss contingency.”
Determinable current liabilities – accounts payable, notes payable, current maturities of long-term debt, dividends payable, returnable deposits, sales and uses taxes, payroll taxes, and accrued expenses.
Contingent liabilities– obligations related to product warranties and product defects, premiums offered to customers, certain pending or threatened litigation, certain actual and possible claims and assessments, and certain guarantees indebtedness of others.