Related Parties

Question 1

a person or entity that is related to the entity (‘reporting entity’)
that is preparing its financial statements

Answer 1

related party

Question 2

Are disclosure of transactions and balances with related parties required?

Answer 2

Yes, under PAS 24

Question 3

A person or a close member of that person’s family is related to a reporting entity if that person (please enumerate):

Answer 3

a. has control or joint control of the reporting entity;
b. has significant influence over the reporting entity; or
c. is a member of the key management personnel of the reporting entity or of a
parent of the reporting entity

Question 4

Close members of the family of a person include:

Answer 4

a. that person’s children and spouse or domestic partner;
b. children of that person’s spouse or domestic partner; and
c. dependents of that person or that person’s spouse or domestic partner.

Question 5

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

Answer 5

Key management personnel

Question 6

The following are not considered as related parties:

Answer 6

a. Two entities solely because of common key management personnel.
b. Two entities solely because of a member of key management personnel of one
entity has significant influence over the other entity.
c. Two associates with a common investor that has significant influence over them.
d. Two joint venturers solely because they share joint control over the same entity.
e. Two joint venturers solely because they share significant influence over the same entity.
f. Two investors simply because they both have voting rights over the same entity,
provided neither of the investors control the said entity.
g. A customer, supplier, franchisor, distributor, or general agent with whom an entity solely transacts a significant volume of business.
h. Other entities such as providers of finance, trade unions, public utilities, and departments and agencies of a government that does not control, jointly control or significant influence the reporting entity.

Question 7

Are related party disclosures are required for government that is related party or
another entity that became a related party through a relationship with government?

Answer 7

No, related party disclosures are not required

Question 8

Related Party - entities
The entity and the reporting entity are members of the same group.

Answer 8

Parent and subsidiaries

Question 9

Related party transactions are required to be stated at their corresponding values as if these transactions were made with unrelated parties.

Answer 9

True

Question 10

Related party transactions automatically make the financial statements misleading
whether these have been properly disclosed or not.

Answer 10

False

Question 11

A person’s spouse is considered close member of that person’s family.

Answer 11

True

Question 12

A branch supervisor cannot be considered as a member of the entity’s key
management personnel.

Answer 12

True

Question 13

A person is considered related to an entity if it holds any level of ownership interest
over that entity.

Answer 13

True

Question 14

A person’s children are considered related to the entity in which that person is part of the key management personnel.

Answer 14

True

Question 15

An entity is considered related if it controls the reporting entity.

Answer 15

True

Question 16

An investor with significant influence and its associate are considered to be related parties.

Answer 16

True

Question 17

An entity who lent 100% of the reporting entity’s multi-billion peso loans is
considered as a related party to the reporting entity.

Answer 17

False

Question 18

Two entities are related if they are both associates of the same third party.

Answer 18

Fales

Question 19

Two entities are not considered to be related based only on the fact that they have
key management personnel in common.

Answer 19

True

Question 20

Two entities are related if they are both joint ventures of the same third party.

Answer 20

True

Question 21

Two joint venturers (i.e., investors) of the same joint venture are considered to be
related.

Answer 21

False

Question 22

The associate’s subsidiaries are also related to the entity who has significant
influence over the associate.

Answer 22

True

Question 23

An entity who supplies 80% of the products that the reporting entity is selling is
considered to be related to the reporting entity.

Answer 23

False

Question 24

A person or a close member of that person’s family is related to a reporting entity
under each of the following scenarios, except
a. The person has control over the reporting entity
b. The person has significant influence over the reporting entity
c. The person is member of the key management personnel of the reporting entity
d. The person is the creditor of all the reporting entity’s loans payable

Answer 24

d. The person is the creditor of all the reporting entity’s loans payable

Question 25

Close members of the family of a person include the following, except a. Person’s parents and ascendants b. Person's dependent younger sister c. Person’s children d. Children of the person’s spouse

Answer 25

a. Person’s parents and ascendants

Question 26

Key management positions include all of the following, except: a. Chief executive officer b. Branch manager c. President d. Head of operations

Answer 26

b. Branch manager

Question 27

Which of the following entities are not considered as a related party of the reporting entity? a. An entity that controls the reporting entity. b. An entity that has significant influence over the reporting entity. c. An entity that is a passive investor in the reporting entity. d. None of the above

Answer 27

c. An entity that is a passive investor in the reporting entity.

Question 28

An entity (i.e., the parent entity) controls another entity (ie., the subsidiary). In addition, the subsidiary has a significant influence over a third party (i.e., associate). The parent entity does not have any ownership interest over the subsidiary’s associate. In this case, which of the following is not correct? a. The parent entity and the subsidiary are related parties. b. The parent entity and the subsidiary’s associate are related parties. c. The subsidiary and the subsidiary’s associate are related parties. d. None of the above

Answer 28

d. None of the above

Question 29

Entity A has significant influence over to both Entity B and Entity C. In this case, which of the following is/are correct? a. Entity A and Entity B are related parties b. Entity B and Care related parties c. Both a and b are correct d. Neither a or b is correct

Answer 29

a. Entity A and Entity B are related parties

Question 30

Entity A has joint control over to both Entity B and Entity C. In this case, which of the following is/are correct? a. Entity Aand Entity B are related parties b. Entity B and C are related parties c. Bothaand bare correct d. Neither anor b is correct

Answer 30

c. Bothaand bare correct

Question 31

Entity Z and Entity X share joint control over Entity A. In this case, which of the following is/are not correct? a. Entity X and Entity A are related parties. b. Entity Zand Entity A are related parties. c. Entity Z and Entity X are related parties d. All of the above

Answer 31

c. Entity Z and Entity X are related parties

Question 32

Entity A control Entity B who in turn controls Entity C. In this case, which of the following is true? a. Entity A and Entity B are not related parties b. Entity B and Entity C are not related parties c. Entity A and Entity C are related parties d. None of the above

Answer 32

c. Entity A and Entity C are related parties

Question 33

Entity A controls Entity B who, in turn, has significant influence over Entity C. In this case, which of the following is/are the related party/ies of Entity C? a. Entity A only b. Entity B only c. Both Entity A and Entity B d. Neither Entity A nor Entity B

Answer 33

b. Entity B only

Question 34

Entity A controls Entity B who, in turn, has investment at FVTOCI representing equity securities of Entity C. In this case, which of the following is/are the related party/ies of Entity C? a. Entity A only b. Entity B only c. Both Entity A and Entity B d. Neither Entity A nor Entity B

Question 35

Entity X controls Entity A, while Entity Y has significant influence over Entity A. In this case, which of the following entities is/are related to Entity X? a. Entity A only b. Entity Y only c. Both Entity A and Entity Y d. Neither Entity A nor Entity Y

Question 36

Which of the following can be considered as the related party of a reporting entity? a. A labor union involving the reporting entity’s factory workers. b. A post-employment benefit plan for the benefit of the reporting entity’s employees. c. A supplier of the 90% of the reporting entity’s goods for sale. d. The sole lender of all of the reporting entity’s loan payable.

Answer 36

b. A post-employment benefit plan for the benefit of the reporting entity’s employees.

Question 37

Required related party disclosures include all of the following, except a. Relationship between a parent and its subsidiaries shall be disclosed only when there were transactions between them. b. The compensation of key management personnel shall be splitin five categories. c. Related party transactions shall be disclosed. d. Related party balances shall be disclosed.

Answer 37

a. Relationship between a parent and its subsidiaries shall be disclosed only when there were transactions between them.

Question 38

A reporting entity is controlled by the government. In this case, which of the following transactions are not required to be disclosed in the reporting entity's financial statements as related party transactions: Transaction 1: Sales to government who controls the reporting entity. Transaction 2: Purchases from another entity over which the government has significant influence

Answer 38

Neither