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On the Radar

Contingencies, Loss Recoveries, and Guarantees

March 2023
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On the Radar
Contingencies, Loss Recoveries, and Guarantees

Although the guidance in ASC 450 on accounting for contingencies has not changed significantly for decades, it is often challenging to apply because of the need for an entity to use significant judgment in doing so (e.g., when developing legal interpretations). Similarly, the guidance in ASC 460 on accounting for guarantee liabilities, which has existed for two decades, is often difficult to apply because the determination of whether an arrangement constitutes a guarantee is complex.