Contingent asset

A possible gain whose existence depends on an uncertain future event, most often a legal claim or a tax refund the company expects to win.

Accounting treats it asymmetrically with contingent liabilities, and deliberately so. A contingent liability is disclosed once it's possible; a contingent asset is disclosed only once the inflow is probable, and recognised only once it's virtually certain. Prudence points one way.

For an analyst, the practical consequence is that upside from litigation is almost never in the numbers, and a company that eventually wins a large refund will book it as a gain in a single year that flatters that year's profit and misleads anyone extrapolating from it.

When a large disputed tax claim resolves, strip the gain out before computing a growth rate.