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IAS 24 — Related Party Disclosures

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › IAS 24 — Related Party Disclosures

  • This topic has 2 replies, 2 voices, and was last updated 6 years ago by amirbazara.
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  • January 29, 2019 at 8:48 am #503553
    sky1743
    Member
    • Topics: 10
    • Replies: 2
    • ☆

    Dear Sir

    Could you please assist me to understand the disclosure requirement of the following case:

    Company A is the parent company (98% shareholdings) of Company C and Company B is a subsidiary of Company A which holds 2% shares of Company C. Company B paid dividend during the year to Company A and Company B, amounting to USD 98,000 and USD 2,000 respectively.

    i) Do we need to disclose the transaction as a related party transaction in Company C’s financial statements?

    ii) If disclosure is required then is it in relation to dividend payment to both Company A and Company B?

    I have found the following para regarding this in IAS 24 which may be appropriate:

    “A related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged.” (IAS 24, para 9)

    Thanks in advance. Appreciate your time and effort.

    Warm regards
    Mymoon

    April 16, 2019 at 2:47 am #512994
    sky1743
    Member
    • Topics: 10
    • Replies: 2
    • ☆

    Is there anyone who can answer it please?

    April 16, 2019 at 4:32 pm #513113
    amirbazara
    Member
    • Topics: 3
    • Replies: 3
    • ☆

    Under IAS 24, a related party is where there is a significant control or influence. 2% would not be considered significant I assume.

    A disclosure is required between parents and subsidiaries whether a transaction has incurred or not. A disclosure will include the name of the parent and the ultimate control party.

    If a related party transaction took place, a separate disclosure required in regards of the nature of relationship and details of transaction and any outstanding balances.

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  • The topic ‘IAS 24 — Related Party Disclosures’ is closed to new replies.

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