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Stephen Widberg.
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Gigakutkha
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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
Stephen Widberg
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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.
Gigakutkha
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