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Potential gains and losses known to exist at the balance-sheet date although the actual outcomes will only be known after one or more events have occurred (or not occurred). Depending on the nature of a particular contingency, it may be appropriate to include it in the financial statements or to show it as a note to the accounts; Financial Reporting Standard 12 provides guidance on the appropriate accounting treatment. Generally, accountants apply the prudence concept and will disclose information on contingent losses more readily than on contingent gains.

Subjects: Accounting.

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