Contingent Payment Sale
"I'll pay you...contingent upon you...doing something." It's not a sale until that "something" happens. Like...the goods actually ship, pass customs, arrive in working condition, and don't contain nuclear residue. Or something like that.
And on the ledger-accounting side of things, a contingent sale ain't a sale until the contingency is lifted. Sometimes you see this in home sales. Like..."I'll buy your home for $325,000...contingent upon me selling my home for at least $200,000."
You don't count the eggs until they're not only in the basket, but are, in fact, identified as...not rotten.
Related or Semi-related Video
Finance: What is Contingent Liability?4 Views
Finance allah shmoop what is contingent liability All right you
know what a liability is right It's a debt it's
a promise you've made that you need to fulfill teo
pay someone and fulfilling it can be done with cash
or ah promise of delivering inventory or after you've sold
the home to the joneses An interesting family with oddly
large foreheads you know delivering good title to the home
to them right So you're fulfilling liability of producing your
home so what's a contingent liability Well think of it
is a call option or a put option on a
security A contingent liability is a derivative of some other
underlying being like another liability Well the most common contingent
liability would be a filed lawsuit that is more than
just an ambulance chasing securities lawyer hoping to get a
quick five hundred grand to go away google might be
willing to pay three billion dollars toe by ring That
wireless doorbell company started by some weirdo contingent upon ring
properly defending its lawsuit from honeywell which claims that they
own the patents on the process while the financial outcome
of that lawsuit is a contingent liability to the company
Ring and the outcome of the joneses moving into town
well is a worldwide dominance and the enslavement of all
human I mean that's what's at stake their people But 00:01:31.39 --> [endTime] not least they keep their front lawn looking nice
Up Next
What is a Contingent Deferred Sales Charge? A Contingent Deferred Sales Charge is a fancy name for a back load fee for mutual fund B shares. Basica...