Related Party Transactions Flashcards
Examples of related parties
_any party over which the entity has the ability to exercise control, joint control, or significant influence
_any party that is able to exert the same control
_two parties subject to common control
_management of the entity
_immediate family members
Is the transaction in the normal course of operations?
_is it usually, frequently, or regularly undertaken by the enterprise for the purpose of generating revenue?
_NOTE: sale of PPE is never part of normal course of operations
Is the change in ownership interests in the item transferred substantive?
have unrelated parties acquired or given up at least 20% of the total equity ownership interest in the item or service benefit?
How to measure RPT not in the normal course of operations without a substantive change in ownership?
carrying value
Is the amount of the exchange supported by independent evidence?
was the exchange at an amount supported by:
_independent appraisals/valuations
_comparable recently quoted mkt prices
_comparable independent bids on the same transx
_comparable amounts of similar transx w unrelated parties
commercial substance
future cash flows are expected to change significantly as a result of the transaction
ASPE 3840.51 RPT disclosure requirements
_relationship _transaction details _amount _measurement basis _amounts and terms for any receivables _contractual obligations _contingencies
How are RPTs recorded under IFRS?
No differently from non-RPT’s. Typically recorded at the exchange amount agreed upon by the parties.
IFRS IAS 24.13 RPT disclosure requirements
_relationship _transaction details _amount _measurement basis _amounts and terms for any receivables _contractual obligations _contingencies _nature of related-party relationships _transactions undertaken _key management compensation
