On the 2^nd of January 2019, the business Campus Computer became a guarantor for Unicorn Pty. Ltd. for a loan totalling $200,000. Unicorn Pty. Ltd. has been a client for more than 12 years, and has been performing extremely well in the past couple of years. The chance to default on loan is close to nil. (6 marks)

Required:

(i)

Using the definition of the term liability per the Conceptual Framework, explain whether the loan of $200,000, taken by Unicorn Pty. Limited can be considered as a liability to the business Campus Computer. [3 marks]

(ii)

The CEO of Campus Computer trusts that this matter should be included on their balance sheet as a liability. Explain if the loan taken by Unicorn Pty. Ltd. meets the recognition criteria of a liability for Campus Computer. [2 marks]

(iii)

Given your answers in part (i) and part (ii), state whether or not the loan taken by Unicorn Pty. Ltd. can appear on the Campus Computers balance sheet. [1 mark]