In 6T May 2019, Abby PIc, a steel company located at Nilai, N.S. (which prepares financial
statements to 31 December) guaranteed a $100,000 bank loan provided to MM Ltd. MM Ltd was
in a strong financial position at 31 December 2019, but this had worsened by 31 December 2020
and it seemed likely on that date that Abby Plc would be required to honour its guarantee
Explain how this guarantee should be treated in the tinancial statements of Abby Pic at 31
December 20 V and 2020
