Code of Federal Regulations Title 49. Transportation 49 CFR § 1201.5-6 5–6 [1201.5–6] Contingencies

(a) The proper accounting treatment for contingencies depends upon whether the contingency is:  Probable:  the event or events are likely to occur;  Reasonably possible:  the chance of occurrence of the future event or events is more than remote, but less than likely;  or Remote:  the chance of occurrence of the future event or events is slight.

(b) Loss contingencies must be accrued when they are probable and the amount of loss can be reasonably estimated. Where they are only reasonably possible, only footnote disclosure is required. Where they are remote, footnote disclosure is not required, but is permitted.

(c) Gain contingencies usually are not reflected in the accounts since to do so might be to recognize revenue prior to its realization. Adequate disclosure shall be made of contingencies that might result in gain, but care shall be exercised to avoid misleading implications as to the likelihood of realization.