Question

Distinguish between a determinable current liability and a contingent liability. Give two examples of each type.

Short answer

Determining current liability is a near debt obligation that is measured exactly, while contingent liability is a liability that may or may not occur contingent on the happening of an uncertain future event.

Step-by-step solution

Step 1- Meaning of Determinable Current Liability

Determinable current liabilities are those liabilities that are determined to be payable within period of one year

Example- Accounts payable, Short term loan, etc

Step 3- Comparing and differentiating Determinable current liability and contingent liability

BASIS	Determinable current liability	Contingent liability
Definition	Obligations that are measured exactly	Liability that may occur depending upon uncertain future event
Accountability	Under current liabilities	Disclosed as notes usually but loss/expense if any is accounted as part of prudence
Measurability	It can be measured exactly	It may or may not be estimated since the happening of the event is uncertain
Examples	Accounts payable, commercial paper, dividends payable	Potential Lawsuits, product warranties, pending investigations