Final answer:
The correct answer is option a. When the future events are probable to occur and the amount can be reasonable estimated.
Step-by-step explanation:
A contingent liability is recorded when the future events are probable to occur and the amount can be reasonably estimated. This means that if it is likely that the event will happen and the amount can be reasonably determined, the liability should be recorded.
For example, if a company is facing a lawsuit and it is probable that they will lose the case and be required to pay damages, they would record a contingent liability. The amount of the liability would be estimated based on the potential damages that could be awarded.