The following have entered into a deed where each party guarantees to each creditor in the Group payment in full of any debt upon winding up. Unicorn Pty. Limited Uniwing Pty. Limited Freewill Group Limited Tornado Pty. Limited ChopChop Pty. Limited Unicorn Pty. Limited had just taken a $4 million loan from Westpac Bank. There is no indication of any default on loan. Required: a)Discuss whether the loan Unicorn Pty. Limited took can be recognise as a liability on the Statement of Financial Position of the other entities included in the deed.

Accounting equation is Asset = Liabilities + Owners equity. An accounting student approached you to seek advice. She would like to know if a business transaction can affect only the left side of the accounting equation. Required: b) Discuss whether or not a transaction can affect only the left side of the accounting equation. If so, give an example and provide journal entry. (4 marks)