State one contingent liability that Samsung has. Under what conditions and event

Question

State one contingent liability that Samsung has. Under what conditions and events will this contingent liability be recorded as a liability? (Do not use Warranty as the answer for this part.)

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (In millions of Korean won, in thousands of US dollars (Note 2.28) December 31 2016 KRW December 31, 2015 KRW December 31, 2016 USD December 31, 2015 USD Liabilities and Equity Current liabilities Trade payables Short-term borrowings Other paya Advances received Withholdings Accrued expenses Income tax payable Current portion of long-term 5,591,350 10,990,183 9,937,550 1,171,614 590,626 10,800,941 2,446,344 1,062,925 3,963,857 302,781 307,275 47,165,446 6,485,039 12,746,789 11,525,910 1,358,878 685,028 12,527,300 2,837,353 6,187,291 11,155.425 8,864,378 1,343,432 992,733 11,628,739 3,401,625 221,548 6,420,603 287,135 5,334,634 9,618,121 7,642,798 1,158,297 855,927 10,026,208 2,932,855 191,017 5,535,794 247,565 es 6,15, 16, 31 liabilities Provisions Other current liabilities Liabilities held-for-sale Total current liabilities 4,597,417 351,176 356,388 54,704,09:5 50,502,909 43,543,216 Non-current liabilities Debentures Long-term borrowings Long-term other payables Net defined benefit liabilities Deferred income tax liabilities Provisions Other non-current liabilities Total liabilities 1,230,448 266,542 3,041,687 358,820 5,154,792 522,378 2,042,140 63,119,716 50,474 1,072,772 2,859,938 149,725 6,288,411 308,773 1,777,899 59,673,438 1,060,883 229,810 2,622,519 309,372 4,444,422 450,390 1,760,717 54,421,329 58,542 3,317,054 173,656 17 358,126 2,062,066 69,211,291

Explanation / Answer

As per GAAP, contingent liabilities are amounts payable to third parties upon happening of an uncertain event. As per the information provided in the question, the Group recognises provisions for the estimated royalty expenses under negotiations with counterparties. The timing and amount of payment depend on the settlement of negotiations. This is a contingent liability.

When the timing and amount payable to counterparties is firmed up and negotiations are finalised, the final payable amount will be recognised as liability.

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