Contingent Liabilities Contingent liabilities are potential obligations where the existence and size of a liability depends on the outcome of an uncertain future event. Examples include warranties, lawsuits, or environmental claims. Because of conservatism, firms may recognize losses and liabilities before the uncertainty is fully resolved. GAAP gives managers considerable discretion in the recognition and measurement of contingent liabilities. FILL IN THE TABLE Contingent Liabilities that are... Probable and reasonably estimable Probable but not reasonably estimable OR Reasonably possible Remote Accounting Requirement