Harley Davidson, Inc , the motorcycle manufacturer, used to include the following note (adapted) in its annual report Notes to Consolidated Financial Statements 7 (in Part) Commitments and Contingencies (Adapted) The Company self insures its product liability losses in the United States up to $3 mi...

1 These are contingent liabilities because at the time of t ...

Harley-Davidson, Inc., the motorcycle manufacturer, used to include the following note (adapted) in its annual report: Notes

Question:

Harley-Davidson, Inc., the motorcycle manufacturer, used to include the following note (adapted) in its annual report:
Notes to Consolidated (in Part): Commitments and Contingencies (Adapted)
The Company self-insures its product liability losses in the United States up to $3 million.
Catastrophic coverage is maintained for individual claims in excess of $3 million up to $25 million.
1. Why are these contingent (versus real) liabilities?
2. How can a contingent liability become a real liability for Harley- Davidson? What are the limits to the company's product liabilities in the United States?
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...