what is the treatment for the Bank Gurantees (BG) in the Financial Statements given by the contractor ??
Treatement of Bank Gurantess in the Financial Statements
RAHUL L C SHARMA (AUDITOR) (21 Points)
01 August 2020RAHUL L C SHARMA (AUDITOR) (21 Points)
01 August 2020what is the treatment for the Bank Gurantees (BG) in the Financial Statements given by the contractor ??
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 02 August 2020
A Bank Guarantee is similar to a Letter of credit in that they both instil confidence in the transaction and participating parties. However the main difference is that Letters of Credit ensure that a transaction goes ahead, whereas a Bank Guarantee reduces any loss incurred if the transaction does not go to plan.
not treated in financial statements because it is credit protection, just like how an insurance is recognised in financial statements but not the benefits or future claims from it.