According to DEX, among the numerous meanings of the word “contingent” are also
included: coincidental, accidental, occasional, sporadic, which may or may not be; which may or
may not happen.
In accounting, the concept of contingent is used to name those liabilities and assets that are
not recognized because their existence will be confirmed only by the occurrence or non-occurrence
of one or more uncertain future events not wholly within the control of the public entity.
Thus, the concept of contingent refers to future events whose occurrence/non-occurrence is
uncertain and can’t be controlled by the enterprise. “The best way to look at a contingent liability is
as an unlikely provision or as another unlikely debt”.
In practice, by “probable” it is usually understood that an event will occur with a probability
of over 50% or that it’s more likely to happen than not to happen. Quantifying the occurrence
probability of a contingent event is not mandatory; instead, it is recommended to recognize an
estimated commitment when it is more probable than improbable. (Cristea et.al., 2004)