How to Record Debt Guarantee Fee Income
Accounting for fees received by an entity for providing a guarantee on a third-party or subsidiary loan.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash | Debit | 12,000.00 | - |
| Unearned Guarantee Revenue | Credit | - | 12,000.00 |
💡 Accountant's Note
Fees received for guaranteeing debt are initially recorded as a liability (unearned revenue) and recognized as income over the life of the guarantee period.
Practitioner & Systems Framework
💻 ERP Architecture
Set up a monthly amortization schedule in the revenue recognition module to bleed the liability to the P&L.
⚠️ Audit Flags
Verification of guarantee fee income against the fair value of the guarantee provided under ASC 460.
📄 Required Documentation
Guarantee agreement, calculation of fair value, and receipt of funds.
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