Accounting Dictionary

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Contingent Asset

Definition: Under international financial reporting standards, a contingent asset is a possible asset arising from past events and that will be confirmed only by future events not under an entity's control. Do not recognize a contingent asset; only disclose it when an incoming payment is probable. However, if the realization of income is virtually certain, then the related asset is no longer a contingent asset, and you can recognize it in the period when the  change occurs.

Continually assess contingent assets to ensure that they are properly disclosed in the financial statements.