When the federal government guarantees a loan made by a private lender, the federal government should record a liability for which of the following amounts?

Question

Quizplus · Accepted Answer

The correct answer is B) The present value of the anticipated payments to the private lender discounted at the government agency's rate. This approach reflects the government's obligation in terms of the present value of the expected future outflows, using its own borrowing rate to discount those future payments. This method provides a more accurate reflection of the government's financial commitment under the guarantee.

When the Federal Government Guarantees a Loan Made by a Private