Entity a Has Provided a Bank Guarantee to a Bank

question 30

Multiple Choice

Entity A has provided a bank guarantee to a bank in relation to a loan provided to entity B. Entity B is solvent and shows no signs of defaulting on the loan. The treatment of the bank guarantee in the records of entity A is to:

• A) recognise a liability
• B) recognise a provision
• C) recognise a contingent liability
• D) do nothing

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Definitions:

Segment Representation

The act of depicting or representing specific subgroups or segments within a broader market or population.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service versus the total amount that they actually do pay.

Market Entry

The process by which a firm enters into a new market to compete and offer goods or services.

Price Falls

A decrease in the monetary value or market price of goods, services, or assets.