Loss Contingency

Do You Know what a Gain Contingency is?

Do You Know what a Gain Contingency is?

Most people are aware of loss contingencies, where a company writes down a portion of an asset when there is a likelihood that a loss will occur.  Some companies have insurance policies to protect from loss, others take the write down.  A loss contingency is used is to account for invoices that may not be collectible.  You can see this pretty regularly as an Allowance for Bad Debt.  The loss hasn’t occurred yet, but history shows that it is likely.