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Statement No. 5
Accounting for Contingencies
STATUS
Issue Date: March 1975
Effective Date: For fiscal years beginning on or after July 1, 1975
Affects: Supersedes ARB 43, Chapter 6
Supersedes ARB 50
Affected by: Paragraph 7 amended by FAS 87, FAS 112, and FAS 123
Paragraph 13 superseded by FAS 71
Paragraph 18 amended by FAS 111
Paragraph 20 amended by FAS 11
Paragraph 23 amended by FAS 114
Paragraphs 41 and 102 amended by FAS 60
Paragraph 44 amended by FAS 113
Footnote 3 superseded by FAS 16
Other Interpretive Pronouncements: FIN 14
FIN 34
Issues Discussed by FASB Emerging Issues Task Force (EITF)
Affects: No EITF Issues
Interpreted by: Paragraphs 8 and 9 interpreted by EITF Issue No. 92-13
Paragraph 8(b) interpreted by EITF Issue No. 93-5
Paragraph 45 interpreted by EITF Issue No. 93-14
Related Issues: EITF 86-2, 86-12, 87-22, 91-10, 93-6, 94-3, and 95-14 and Topic No. D-35
Abbreviations for Accounting Pronouncements
FAS - FASB Statements
FIN - FASB Interpretations
FTB - FASB Technical Bulletins
APB - APB Opinions
AIN - AICPA Interpretations
ARB - Accounting Research Bulletins
CON - FASB Concepts
EITF - EITF Issues
Q&A - FASB Implementation Guides
SUMMARY
This Statement establishes standards of financial accounting and reporting for loss contingencies. It requires accrual by a charge to income (and disclosure) for an estimated loss from a loss contingency if two conditions are met: (a) information available prior to issuance of the financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements, and (b) the amount of loss can be reasonably estimated. Accruals for general or unspecified business risks ("reserves for general contingencies") are no longer permitted. Accounting for gain contingencies under Accounting Research Bulletin No. 50,
Contingencies, remains unchanged; they are recognized when realized.
Copyright by Financial Accounting Standards Board. All Rights Reserved. Used by Permission.
©2000 New York State Society
of Certified Public Accountants. Legal Notices.
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