Final answer:
The disclosure of a contingent liability in footnotes implies that the obligation is possible, as per accounting guidelines, liabilities that are probable and estimable should be recorded on the balance sheet.
Step-by-step explanation:
The disclosure of a contingent liability only in the footnotes of a company's financial statements indicates that the possibility of the obligation actually occurring is not considered probable, but rather possible. According to accounting principles, if a contingent liability is probable and can be estimated, it should be recorded as an expense and a liability on the balance sheet. However, if this obligation is only disclosed in the footnotes, it suggests that the potential liability does not meet both of these criteria, but still needs to be disclosed because the future events could potentially require a financial outlay by the company. Therefore, the correct answer would be C. possible.