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RPs

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › RPs

  • This topic has 1 reply, 2 voices, and was last updated 8 months ago by Stephen Widberg.
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  • October 5, 2021 at 2:35 pm #637026
    Gigakutkha
    • Topics: 20
    • Replies: 7
    • ☆

    Hi,
    1) If company A owns, say, 5% of shares of company B, what is company B for company A (if significant influence is not exercised)? And are they regarded as related parties?

    2) In Kaplan, there is a TYU: Mr P owns 25% of A and 30% of B. Mr P is able to exert significant influence over entity A and entity B.
    In the answer, they say that “Mr P is a related party of both entity A and entity B as he is able to exercise significant influence over each entity.
    Mr P does not control either entity A or entity B. Therefore, A and B are not related parties”.

    I don’t understand why A and B are not RPs if significant influence is exerted in both cases. Is control really so important?

    Thanks

    October 6, 2021 at 1:07 pm #637127
    Stephen Widberg
    Moderator
    • Topics: 10
    • Replies: 2529
    • ☆☆☆☆☆

    1. No

    2. It has always been said that 2 associates are not necessarily related to each other. BUT, like everything else in IAS 24, it is a judgement call, so, in certain circumstances, there may be other factors that suggest they may be RPs.

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