Oscar Ltd has guaranteed the $50,000 bank debt of its major supplier of merchandise. Oscar Ltd's attorneys have concluded that it's possible (less than probable but greater than remote) that the supplier will default on its obligations. You have been retained to advise Oscar Ltd if the $50,000 should be:

1) shown as a liability on its balance sheet,

2) not shown on the balance sheet but disclosed in the notes to the financial statements, or

3) neither shown on the balance sheet nor disclosed in the notes.

Explain your answer, which should not exceed 100 words.

Format your answer by copying and pasting the following bold face into the answer box provided; however, please do not use bold face in your answer itself.

Where should the guarantee be disclosed, if at all?