The Difference Between a Guarantee and an Indemnity Is That

question 31

Multiple Choice

The difference between a guarantee and an indemnity is that

• A) the Statute of Frauds applied only to indemnities.
• B) indemnities need to be in writing to be enforceable.
• C) a guarantee is a promise to assume another's debt.
• D) a guarantee is a conditional promise whereas an indemnity is not.
• E) none of the above

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Definitions:

Initial Value Method

A type of accounting for investments where the investment is recorded at its cost at the time of acquisition, without subsequent change for increases or decreases in value.

Noncontrolling Interest

A share of equity in a subsidiary not held by the parent company, reflecting the interest of minority shareholders.

Initial Value Method

An accounting approach where investments are recorded at their acquisition cost, without subsequent adjustments for market fluctuations.

Noncontrolling Interest

The portion of equity in a subsidiary not owned by the parent company, reflecting the interest of minor shareholders.