Which of the following statements is not correct with respect to accounting for Guarantees?

Multiple Choice

• When one company guarantees the debt of another company, that contingency must be disclosed even if the contingency is only remotely possible.

• The Guarantee liability account represents deferred revenue associated with the stand ready fee.

• Both the stand ready obligation and the contingent future obligation are recorded at fair value.

• The Guarantee liability account decreases over the life of the loan as revenue is earned.