RP Transactions

Question 1

An entity that entered a related party transaction would be required to disclose all, except:

A. Nature of the relationship between parties
B. Nature of any future transactions planned between the parties and the terms involved.
C. Peso amount of the transaction
D. Amount due from or to related parties

Answer 1

B

Question 1

Disclosure of related-party transactions is required by financial reporting standards because

A. The do not commonly occur in the normal course of business.
B. They can’t be presumed to be carried out on an arm’s length basis and thus, the enterprise’s financial statements are not complete and reliable.
C. They usually give material effect on financial statements than transactions between unrelated parties.
D. They usually involve regularities

Answer 1

B

Question 2

Which should be disclosed as related party transaction in entity’s separate financial statements?

A. Key management personnel compensation
B. Sales to affiliated parties
C. Key management personnel compensation and sales to affiliated parties
D. Neither key management personnel compensation and ales to affiliated parties

Answer 2

C

Question 3

Which of the ff transactions most likely would be a related party transaction requiring disclosure?

A. The entity borrowed P500,000 from Manila Bank, issuing a non-interest bearing note.
B. The entity borrowed P1,000,000 from QC Bank at a rate significantly above the prevailing market rate
C. The entity borrowed P250,000 from Fairview Bank with no scheduled terms for how and when funds will be repaid.
D. ALL

Answer 3

C

Question 4

Financial statements include disclosure of material transactions between related parties except:

A. Nonmonetary Exchange
B. Sales of inventory by a subsidiary to the parent when consolidated financial statements are prepared
C. Expense allowance for executives which exceed normal business practice
D. An entity’s agreement to act as a surety for a loan to the chief executive officer.

Answer 4

B

Question 5

The Iron Man Company has an 80%-owned subsidiary, Captain America Inc. and is a venturer in Thor LTD., a joint venture company. During the year ended, Iron Man sold goods to both companies. Consolidated financial statements are prepared combining the financial statements of Iron Man for 2023, disclosure is required of transactions with:

A. Captain America only
B. Thor LTD only
C. Both
D. Neither

Answer 5

C

Question 6

__________ is an arm length’s price.

Answer 6

Price or Fair Value

Question 7

______________ an entity that is controlled, jointly controlled, or significantly influenced by a government.

Answer 7

Government-related entity

Question 8

________ includes all employee benefits.

Answer 8

Compensation.