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What is a gain contingency, and do they need to recorded on the balance sheet and/or in the notes to the financial statements?

Gain contingencies are suspected to result in a positive outcome. U.S. GAAP takes a conservative approach to recording gain contingencies.  Gain contingencies will never be recorded (accrued), however, if they are reasonably likely to occur, they should be reported in the notes to the financial statements. Think of this approach as a way to avoid companies using gain contingencies as an excuse to purposely over record gains in their financial statements. Possible gain contingencies will consist of:

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