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Chapter 2 — Loss Contingencies and Commitments

2.7 Balance Sheet Classification

2.7 Balance Sheet Classification

The balance sheet classification of an accrued contingent liability should be based on the period in which the entity expects the contingency to be settled. A liability should be classified as short-term if it is expected to be settled within one year or less of the balance sheet date (or longer if the entity’s operating cycle is greater than one year). Otherwise, the liability should be classified as long-term.