IAS 24 - Related party Transactionz

Question 1

What is a related party:

Answer 1

A person or close member of that person’s family:
- that has control or joint control of the reporting entity.
- has significant influence over the reporting entity.
- is a member of the key management personnel of the reporting entity or a parent of the reporting entity.

Question 2

A close family member includes:

Answer 2

• children
• spouse
• domestic partner
• children of a spouse or partner

Question 3

IAS 24 does NOT apply when:

Answer 3

• two entities simply have a director in common
• providers of finance and government agencies
• a single customer or supplier an entity has significant transactions with.

Question 4

Examples of related party transactions:

Answer 4

• sales and purchase of goods
• sales and purchase of property and assets
• rendering or receiving services
• leasing arrangements
• finance arrangements
• provision of guarantees or collateral
• commitments to do something if a particular event occurs.

Question 5

Required disclosures under IAS 24:

Answer 5

• Nature of the relationship
• description of the related party transaction
• transaction amount
• details and amounts of the outstanding balance
• any allowance for receivables against outstanding balance
• any irrecoverable debt expense in respect of outstanding balances

Other disclosure:
- Between group and subsidiary relationship needs to be disclosed, even without transactions
- compensation given to key management personnel
- reporting entity exempt from related party disclosures.