Unclaimed property typically results from the failure of an entity or person who is legally entitled to property to make a valid claim against the holder of the property (business) within a prescribed period of time. Basically, unclaimed property laws require businesses that have unclaimed property to report and remit such property to the appropriate state or states. Common types of unclaimed property include unredeemed gift certificates, vendor credits, and outstanding checks, such as payroll and dividend checks.
Since unclaimed property claims do not constitute a tax, Statement of Financial Accounting Standards No. 5, "Accounting for Contingencies" (FAS 5)5 may affect an enterprise's financial reporting obligations. In FAS 5, the term "contingency" is defined as "an existing condition, situation, or set of circumstances involving uncertainty as to possible gain (hereinafter a 'gain contingency') or loss (hereinafter a 'loss contingency') to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur.
According to FAS 5, a contingent loss should be charged to income if information is available before issuance of the financial statements indicating by fiscal year-end that a loss probably has been incurred and that the amount of such loss can be reasonably estimated. If there is a reasonable possibility that the loss will be incurred, FAS 5 generally requires the disclosure in the footnotes of the financial statements to include a discussion of the nature of the loss and either the possible range of the loss (if it can be estimated) or a statement that such loss cannot be estimated.

FAS 5 provides: "Disclosure is not required of a loss contingency involving an un-asserted claim or assessment when there has been no manifestation by a potential claimant of an awareness of a possible claim or assessment unless it is considered probable that a claim will be asserted and there is a reasonable possibility that the outcome will be unfavorable." As used in FAS 5, the term "remote" means "the chance of the future event or events occurring is slight." The term "reasonably possible" means that the chance is "more than remote but less than likely." The term "probable" indicates that "the future event or events are likely to occur."