Accounting Treatment of Bid Bond

[kumanah]

Please how do we treat Bid bond issued by the bank on behave of company B but guaranteed by company A for a proposed contract by D. All charges were paid by company A

 

[kirby]

Please help others to help you. You need to define who "we" is: are you the Bank, are you Company A, are you Company B, are you Company D?????

 

[kumanah]

Kirby, sorry for the mix up. "WE" in the question refers to company A. company B is a coy that a director in Coy A is interested in. Coy D is the client
Thanks

 

[kirby]

Looks to me that Co A now has a contingent liability. In US only need to disclose it unless Company B fails to perform. If so then Bank pays D and Bank can look to Co B or Co A (you) to get reimbursed.

 

[kumanah]

Thanks so much. It is contingent liability then.

Regards