Related Parties and Events After Reporting Period

Question 1

When are parties considered related? (3)

Answer 1

90

Question 2

This is the power over the invested or the power to govern the financial and operating policies if an entity so as to obtain benefits.

Answer 2

Control

Question 3

True or False: In order for control to be such, there should be only direct ownership of more than half to the voting power of an entity.

Answer 3

False. Direct or indirect ownership is allowed.

Question 4

Control is ownership directly or indirectly through __________ of more than half of the voting power of an entity.

Answer 4

subsidiaries

Question 5

This is the power to participate in the financial and operating policy decision of an entity, but not control of those policies.

Answer 5

Significant influence

Question 6

What is the percentage of share ownership to be considered having significant influence?

Answer 6

20% or more

Question 7

If an investor owns 20% of another entity, does he had significant influence if the ownership is indirect?

Answer 7

Yes

Question 8

Can an investor who owns 20% of another entity not have significant influence?

Answer 8

Yes. If it can be clearly demonstrated that he has no significant influence despite owning 20% of the entity.

Question 9

This is the contractually agreed sharing of control over an economic activity.

Answer 9

Joint control

Question 10

This is the parent, the subsidiary and the fellow subsidiaries.

Answer 10

Affiliates

Question 11

If an investor owns more than 50% of an investee, the investor is known as? And the investee as?

Answer 11

Parent, Subsidiary

Question 12

These are the entities over which one party exercises significant influence.

Answer 12

Associates

Question 13

If an investor own at least 20% of the investee, the investee is known as an?

Answer 13

Associate

Question 14

True or False: The term associate includes the subsidiary or subsidiaries of the associate.

Answer 14

True

Question 15

These re related to the joint venture because they have joint control of the activities of the joint venture.

Answer 15

Venturers

Question 16

Are venturers related to each other?

Answer 16

No

Question 17

Are subsidiaries related to each other?

Answer 17

Yes

Question 18

These are the persons with managerial positions, like the president, vice-president, chief executive officer and other officers with responsibility of controlling the activities of entity.

Answer 18

Key management personnel

Question 19

What are examples of related parties?

Answer 19

Affiliates
Associates
Venturers

Question 20

Who are the other related parties?

Answer 20

1. Key management personnel
2. Close family members of KMP
3. Individuals or shareholders owning at least 20% of reporting entity
4. Close family members of no. 3
5. Post-employment benefit plan

Question 21

Who are the close family members of KMP?

Answer 21

Spouse and children
Children of spouse
Dependents and dependents of spouse

Question 22

What is PAS 24?

Answer 22

Related Party Disclosures

Question 23

This is a transfer of resources or obligations between relate parties, regardless of whether price is charged.

Answer 23

Related Party Transaction

Question 24

Are related party transactions financial transactions?

Answer 24

Not necessarily

Question 25

Should related party relationships still be disclosed if there have been no transactions between the related parties?

Answer 25

Yes basta control exists

Question 26

What is the hierarchy of required disclosure of relationships between parents and subsidiaries?

Answer 26

a. name of parent of an entity b. ultimate controlling party c. next most senior parent that produces FS for public use

Question 27

IF there have been transactions between related parties, what should the entity disclose?

Answer 27

1. nature of relationship 2. information about the transactions 3. outstanding balances necessary

Question 28

True or False: PAS 24 provides for specific measurements of related party transactions.

Answer 28

Pricing policies

Question 29

This method sets the price by reference to comparable goods sold in an economically comparable market to a buyer unrelated to the seller.

Answer 29

Uncontrolled Price method

Question 30

This method is often used where goods are transferred between related parties before a sale to an independent party is made.

Answer 30

Resale price method

Question 31

True or False: Uncontrolled price method sets the price by reference to comparable goods sold in an economically comparable market to a buyer related to the seller.

Answer 31

Buyer must be unrelated to the seller

Question 32

This method seeks to add an appropriate markup to the supplier's cost.

Answer 32

Cost plus method

Question 33

This is method occurs when no price is charged, as in the case of free provision of management services and the extension of free credit on a debt.

Answer 33

No price method

Question 34

What is PAS 10?

Answer 34

Events are the reporting period

Question 35

These are events, whether favorable or unfavorable, that occur between the end of reporting period and the date on which the financial statements are authorized for issue.

Answer 35

Events after the reporting period

Question 36

What do events are the reporting period may require?

Answer 36

Either disclosure or adjustment

Question 37

These are those events that provide evidence of conditions that arise after on or before end of reporting period.

Answer 37

Adjusting events

Question 38

These are those events that are indicative of conditions that arise after the end of reporting period.

Answer 38

Non-adjusting events

Question 39

When are financial statements authorized for issue?

Answer 39

When the BOD review the financial statements and authorizes them.

Question 40

Does an entity need to submit its financial statements to the shareholders for approval after the financial statements have been issued?

Answer 40

Yes in some cases

Question 41

When the BOD and the SH both approve the FS but on different dates, when is the date of issue?

Answer 41

The date when the BOD approves and authorizes the FS.

Question 42

What is the treatment for adjusting events?

Answer 42

Adjust the FS

Question 43

What is the treatment for non-adjusting events?

Answer 43

Do not adjust the FS. Disclosures will suffice (nature of the event and estimate of its financial effect)

Question 44

If a management indicates after the end of the reporting period that it intends to liquidate the business or cease trading or there is no other realistic alternative, should the FS still be prepared?

Answer 44

No under the going concern basis

Question 45

What happens if dividends are declared after the end of the Reporting Period, but before the F/S are approved for issue?

Answer 45

They are disclosed in the notes.