F2C - Chapter 17: Related party disclosures

Question 1

What is a related party?

Answer 1

A person or entity that is related to the entity that is preparing its financial statements.

Question 2

What are typical related parties?

Answer 2

Key management personnel
Close family members of key management personnel
Entities that are members of the same group

Question 3

What is considered not to be related parties?

Answer 3

Two entities simply because they have a director/member of key management personnel in common
Two JV’s simply because they share joint control of a JV
Providers of finance
Key customers and suppliers

Question 4

What are key management personnel?

Answer 4

Those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director of that entity

Question 5

Who are close members of the family of a person?

Answer 5

Those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.
They would include children, spouses or domestic partners, children and other dependents of a spouse or domestic partner

Question 6

What is a related party transaction?

Answer 6

A transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged

Question 7

Where there have been transactions between the entity and a related party what is the entity required to disclose?

Answer 7

Nature of the related party relationship
Nature of the transaction
Amount of the transaction
Any outstanding balance relating to the transaction
Any provisions for doubtful debts related to the amount of any outstanding balance

Question 8

What are some examples of related party transations?

Answer 8

purchases/sales of goods
purchases/sales of property or other assets
rendering/receipt of services
leasing arrangements
management contracts
finance arrangements