Letter of Credit Forum

I found an error in your book. In your "Accountants' Handbook, Special Industries and Special Topics, Volume 2" you claim:

"Standby Letters of Credit are typically recorded as contingent liabilities."

However, nothing could be further from the truth. You confuse letters of credit and standby letters of credit. A letter of credit should be accounted for as a contingent liability and the fair value of a  guarantee is to be recognized as a liability. 

The fact that you do not distinguish between guarantee, surety, and international bank guarantee or standby LC gives casts further doubts on the veracity of your statements and the value of your publication. I suggest to reread FASB Accounting Standards Codification Topic 460, Guarantees and ponder the difference between dependent and independent payment obligations (LC, international bank guarantee independent; guarantee, surety dependent) as well as documentary payment undertakings (LC, standby) and non-documentary payment obligations (European style bank guarantee).

I would have preferred to not publicly shame you, but your website is a mess and you treat me like a spammer when asking 20 pieces of personal information from me when I want to help you improve your product. Much easier to publicly point out your errors.

Counting on your goodwill, 

Admin