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Qualifying contingent liabilities are recorded as an expense on the income statement and a liability on the balance sheet. If the contingent loss is remote, meaning it has less than a 50% chance of occurring, the liability should not be reflected on the balance sheet.

The footnotes to your company's financial statements give investors and lenders insight into account balances, accounting practices and potential risk factors ? knowledge that's vital to making well-informed business and investment decisions.

Reporting entities must disclose separately, either on the balance sheet or in the footnotes, the major classes of assets and liabilities of a discontinued operation for all periods presented.

A loss contingency is a charge to expense for what is considered to be a probable future event, such as an adverse outcome of a lawsuit. A loss contingency gives the readers of an organization's financial statements early warning of an impending payment related to a likely obligation.

What Are Footnotes? Pick up any financial report and you'll always find references to the footnotes of the financial statements. The footnotes describe in detail the practices and reporting policies of the company's accounting methods and disclose additional information that can't be shown in the statements themselves.

Include as discontinued operations, net of tax, if the component of the business is classified as held-for-sale or is discontinued in the interim period. Include in the gain or loss section of the interim report and include the tax with all other income tax.

The exact nature of these footnotes varies, depending upon the accounting framework used to construct the financial statements (such as GAAP or IFRS). Footnotes are an integral part of the financial statements, so you must issue them to users along with the financial statements.