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A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from
A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. Required: Explain what type of obligation one has committed in order to give rise to a liability. During 2019 Smack Berhad give a guarantee of certain borrowings of Pony Berhad, whose financial statement at that time is sound. During 2020 , due to the outbreak of Covid-19, the financial condition of Pony Berhad deteriorates and at 30 June 2020 Pony Berhad files for protection from its creditors. Required: Explain the accounting treatment required at: (i) 31 December 2019 (ii) 31 December 2020
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