Final answer:
Materiality is an important criterion used to determine the reporting of a contingent liability. Conservatism, objectivity, and relevance are also considered in determining the reporting of a contingent liability.
Step-by-step explanation:
Materiality is an important criterion used to determine the reporting of a contingent liability. Contingent liabilities are potential liabilities that may arise in the future depending on the outcome of uncertain events. A contingent liability is considered material if its omission or misstatement could influence the economic decisions of users of the financial statements.
Other criteria that may be considered in determining the reporting of a contingent liability include conservatism (the principle of recognizing potential losses and liabilities earlier than potential gains and assets), objectivity (the requirement for the information to be free from bias and supported by evidence), and relevance (the information's capacity to make a difference in the decisions of financial statement users).