Suppose company A purchases goods from company B. As per terms,company A requires a bank garantee for this purchase. So,in his bank,he has a bank guarantee. Now my question is whether this bank guarantee is needed to show as contingent liability in the books of A Ltd? Please help me.
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Replies (2)
yes certainly.
but why? i mean we are providing a liability and if we fail to pay,then there will be automatically payment of that liability.
there is certain obligation and certain outflow of assets.
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