A Contingent Asset is a potential economic benefit that is dependent on some future event(s) largely out of a company’s control. Technically, it is a resource, which will not be used unless a future event occurs. A company invests in a contingent asset, in order to be able to use the asset in future, if the future event occurs. A good example is a lease contract of a building, which is not being used at the time of lease. The value of a contingent asset is determined by how likely the future event will occur and what the impact would be on the company if the event does not happen or happens earlier than expected. In other words, the cost of an alternative scenario for each outcome of the future event is also important when determining its value.For instance, a company may consider several scenarios related to a new product:-1- One scenario includes the product reaching mass market acceptance before the end of the year,2- While another scenario includes this happening after the year-end.
