Debt guarantees are:
A)Never disclosed in the financial statements.
B)Considered to be contingent liabilities.
C)A bad business practice.
D)Recorded as liabilities even though it is highly unlikely that the original debtor will default.
E)Considered to be current liabilities.

Question

Quizplus · Accepted Answer

Debt guarantees are promises to assume the obligation of another entity if they fail to make payment. As they are dependent on the occurrence of a future event, they are considered as contingent liabilities and are disclosed in the financial statement footnotes.

Debt Guarantees Are