What is a liability?

• Essential characteristics for a liability are:
• A present obligation to another entity
• The present obligation arises as a result of past events
• An outflow of resources embodying economic benefits is expected to flow from the entity as a result of settling the present obligation
• To be recognised as a liability on the balance sheet, the outflow of resources embodying economic benefits must
• Be probable and 
• Be capable of being measured reliably
• Contingent liabilities arise from a past event that may be confirmed only by uncertain future events not controllable by the entity 

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