PERSPECTIVE AND ISSUES
The accounting requirements for contingencies are contained primarily in FASB ASC 450. A contingency is an existing condition, situation, or set of circumstances involving uncertainty as to possible gain or loss to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur. Resolution of the uncertainty may confirm the acquisition of an asset, the reduction of a liability, the loss or impairment of an asset, or the incurrence of a liability. (FASB ASC 450-10-05-5)
Not-for-profit organizations use the same rules for recording and disclosing contingencies as commercial entities. In addition to all of the contingencies that face commercial enterprises, not-for-profit organizations often provide ...