Exactly. Please go to accounting school and learn what the difference is.
A contingent liability is a potentialliability that may occur, depending on the outcome of an uncertain future event. A contingent liability is recorded in the accounting records if the contingency is probableand the amount of the liability can be reasonably estimated.
I have re-bolded the applicable words from an accountants view that are key to recognising a liability (i.e. my view).
This can be split into two parts and you need both of them to record the liability:
1) Is it probable? No. Qld Courts have determined it Texas Courts don't have jurisdiction over an Australian company, management have determined this and PwC previously signed this off in Jun-17 financial statements.
2) Can it be reasonably estimated? Yes, GRR are seeking $20m but because you need all criteria to be met, it doesn't fit the definition of a liability (i.e. it isn't probable).
Does this mean it will never be a liability? No, not necessarily. More information may come to light or circumstances may change but currently, it does not meet the definition of a liability.
CTP Price at posting:
8.6¢ Sentiment: None Disclosure: Not Held
(20min delay)
