Financial Reporting · Ind AS 24 Related Party Disclosures

Ind AS 24: Related Party Transactions and Disclosure Requirements

Updated 5 October 2026 · Fact-checked

Ind AS 24 requires an entity to disclose related party relationships, transactions, outstanding balances and commitments so users can see how these ties affect its financial statements. To solve a question, identify the related parties, list the transactions, disclose them by category with balances, terms and any provisions, and ignore items that are not related party transactions.

Understand Related Party Transactions and Disclosure Requirements

A related party relationship can distort financial statements. A parent may sell goods to a subsidiary at a price no outsider would pay. A loan to a director's firm may carry no interest. Ind AS 24 does not ban such dealings. It makes you disclose them so users can judge their effect on profit, financial position and risk.

Start with the related party: a person or entity related to the reporting entity through control, joint control, significant influence, or key management personnel status. Close family members of such a person can also create a relationship. Entities that are members of the same group are related to each other: the parent, its subsidiaries and its fellow subsidiaries. Associates, joint ventures and post-employment benefit plans are related only under the specific conditions in the definition. For example, an associate or joint venture of the entity or of a member of its group, or a post-employment benefit plan for the benefit of employees of the reporting entity or of an entity related to it. Learn the definition first. Every disclosure question depends on spotting the parties correctly.

A related party transaction is a transfer of resources, services or obligations between related parties, whether or not a price is charged. Sales, purchases, loans, leases, guarantees, services, and settlements on behalf of another party all count.

Disclosure works at two levels. The first is the relationship: you disclose parent and ultimate controlling party relationships whether or not any transaction occurred. The second is the transactions: the nature of the relationship, the amount of transactions, outstanding balances (including commitments), their terms, any security, the nature of consideration to be given in settlement, guarantees given or received, and provisions for doubtful debts and expense recognised for bad or doubtful debts due from related parties.

Some things are not necessarily related parties. Two entities are not related just because they share a director or other key management person. Providers of finance, trade unions, public utilities, and government departments are not related merely from normal dealings with the entity. A single customer, supplier or agent with whom you do large business is also not related only for that reason.

Keep the scope clear. Ind AS 24 applies to both consolidated and separate financial statements. Intragroup transactions and balances that are eliminated on consolidation are not disclosed in the consolidated financial statements. They are disclosed in the separate financial statements of the parent and of the subsidiaries.

Key rules to remember

Relationship disclosure: Parent-subsidiary relationships must be disclosed irrespective of whether there have been transactions; Disclose the name of the parent and, if different, the ultimate controlling party.
Transaction disclosure: Nature of relationship + amount of transactions + outstanding balances (including commitments) + terms and conditions + guarantees + provisions/bad debt expense; Give this for each related party category, not as one lump sum.
Key management personnel compensation: Disclose in total and for each of: short-term employee benefits, post-employment benefits, other long-term benefits, termination benefits, share-based payment; KMP means persons with authority and responsibility for planning, directing and controlling the entity's activities.
Categories for separate disclosure: Parent; entities with joint control or significant influence over the entity; subsidiaries; associates (including subsidiaries of the associates); joint ventures in which the entity is a venturer (including subsidiaries of the joint ventures); KMP of the entity or its parent; other related parties; Items of a similar nature may be aggregated, except where separate disclosure is necessary to understand the effect of the related party transactions on the financial statements.
Arm's length statement: Say terms are equivalent to arm's length only if you can substantiate it; Never write it without support.
Not necessarily related: Two entities merely having a common director or KMP; providers of finance, trade unions, public utilities, government departments in normal dealings; a single customer, supplier, franchisor or agent with whom you have significant business; Check for control or significant influence before concluding.

How to solve Related Party Transactions and Disclosure Requirements questions

Use this order for any Ind AS 24 question, whether a short case or a disclosure note.

1Identify the reporting entity and whether the statements are consolidated or separate.
2Test every named party for control, joint control, significant influence, KMP status or close family link, and test each against the 'not necessarily related' list.
3Mark the parent and ultimate controlling party and note that the relationship is disclosed even with no transaction.
4List each transaction with a related party, including free or non-monetary ones such as guarantees and commitments.
5Group the items by category (parent, subsidiaries, associates, KMP, others) with amounts, outstanding balances, terms, security and settlement nature.
6Add provisions for doubtful debts and the expense recognised for bad debts from related parties.
7Disclose KMP compensation in total and by benefit type.
8Conclude: state what is disclosed, what is excluded and why, in provision-facts-conclusion form.

Quickest way: Party-test then category table

When to use it: Use when time is short and the question lists many parties and transactions.

Write each party's name and tick only if control, joint control, significant influence or KMP/family applies.
Strike off ordinary vendors, banks, unions and entities linked only by a common director.
Write the transaction amount and balance against each ticked party under its category.
Add commitments, guarantees and provisions in one line each.
Write one line of conclusion for each excluded party giving the reason.

Common mistakes in Related Party Transactions and Disclosure Requirements

Treating two entities as related only because they have a common director.
The link looks strong and students assume influence.
Fix: Ind AS 24 says a common director or KMP alone does not make entities related. Look for control, joint control or significant influence.
Disclosing parent-subsidiary relationships only when there were transactions.
Students link all of Ind AS 24 to transactions.
Fix: Relationship disclosure is required regardless of transactions. Only the transaction details depend on there being transactions.
Omitting commitments, guarantees and provisions while disclosing only amounts of transactions.
Students focus on profit and loss items.
Fix: Disclose outstanding balances including commitments, guarantees given or received, and provisions for doubtful debts and related bad debt expense.
Treating a bank, trade union or government department as related simply because of heavy dealings.
Large volume feels like influence.
Fix: Normal dealings by providers of finance, trade unions, public utilities and government departments do not make them related. Same for a major customer or supplier.
Presenting KMP compensation as one total.
Students give the figure but skip the breakdown.
Fix: Give the total and the split into short-term, post-employment, other long-term, termination and share-based payment.

Worked examples

Example 1

Alpha Ltd holds 60% of Beta Ltd. Beta sold goods of ₹40,00,000 to Alpha during the year and ₹6,00,000 is unpaid at year end. Beta also bought goods of ₹10,00,000 from Gamma Ltd, which shares one director with Beta, and Gamma holds no shares in Beta. Beta's bank gave it a loan of ₹25,00,000. Which items does Beta disclose as related party items in its own financial statements?

Show the solution

Alpha controls Beta through 60% holding, so Alpha is the parent and a related party. The relationship is disclosed regardless of transactions.
Sale of ₹40,00,000 to Alpha is a related party transaction and ₹6,00,000 is an outstanding balance to be disclosed with its terms, security and settlement nature.
Gamma shares a director with Beta. Sharing a director alone does not make Gamma related, and no control or significant influence is stated. Its purchase of ₹10,00,000 is not a related party transaction on these facts.
The bank loan comes from a provider of finance in normal dealings. The bank is not a related party only for that reason.

Answer: Beta discloses the parent relationship with Alpha, sales of ₹40,00,000 and the receivable of ₹6,00,000 with terms. Gamma purchases and the bank loan are not related party disclosures on these facts.

Example 2

Delta Ltd's key management personnel received during the year: salaries and bonus ₹1,20,00,000; employer contribution to provident fund ₹9,00,000; share-based payment expense ₹15,00,000. Delta also guaranteed a ₹50,00,000 loan of its associate Eta Ltd. During the current year Delta recognised a loss allowance (expected credit loss) of ₹4,00,000 against a receivable of ₹12,00,000 from Eta, and this is the only expense recognised for that debt in the year. How is this disclosed?

Show the solution

KMP compensation is disclosed in total and by category. Short-term employee benefits are ₹1,20,00,000.
Post-employment benefits are ₹9,00,000 and share-based payment is ₹15,00,000.
Total compensation is 1,20,00,000 + 9,00,000 + 15,00,000 = ₹1,44,00,000.
Eta is an associate, so it is a related party. The guarantee of ₹50,00,000 given on its behalf is a related party transaction and is disclosed.
The outstanding balance of ₹12,00,000 from Eta is disclosed with terms. Ind AS 24 words the related disclosures as 'provisions for doubtful debts' and 'expense recognised during the period in respect of bad or doubtful debts due from related parties'. Under Ind AS 109 the amount here is the loss allowance (expected credit loss) of ₹4,00,000, so disclose ₹4,00,000 as the allowance against the balance.
Because the loss allowance was created in the current year and is the only charge for this debt, the expense recognised in the period is also ₹4,00,000.

Answer: KMP compensation is ₹1,44,00,000 in total: short-term ₹1,20,00,000, post-employment ₹9,00,000, share-based ₹15,00,000. Under associates, disclose the guarantee of ₹50,00,000, the receivable of ₹12,00,000, the loss allowance (the Ind AS 24 'provision for doubtful debts') of ₹4,00,000 and the expense recognised for the doubtful debt in the year of ₹4,00,000.

Exam tips

In case-scenario MCQs, first ask whether the link is control, joint control, significant influence or KMP. If it is only a common director or heavy business, the answer is usually not related.
In written answers, use provision-facts-conclusion form and name the specific category for each party.
Always cover balances, commitments, guarantees and provisions, not only transaction amounts.
Add up KMP compensation by category and show the total, since a clean breakdown earns marks.
For Ind AS 24 versus IAS 24 questions, state only differences you are sure of and say plainly if the rest is aligned with IAS 24.

Practice questions from Ind AS 24 Related Party Disclosures

Related Party Transactions and Disclosure Requirements in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Related Party Transactions and Disclosure Requirements: frequently asked questions

What must be disclosed under Ind AS 24?

You disclose parent and ultimate controlling party relationships, KMP compensation, and for related party transactions the amount, outstanding balances including commitments, terms and security, guarantees, and provisions for doubtful debts. Present them by category of related party.

Are two companies with the same director related parties?

Not necessarily. Ind AS 24 says a common director or other KMP alone does not make entities related. You must check for control, joint control or significant influence.

Do I disclose the parent-subsidiary relationship if there were no transactions?

Yes. Relationship disclosure is required whether or not any transactions took place. Transaction details are given only where transactions exist.

What is the difference between Ind AS 24 and IAS 24?

Ind AS 24 is largely aligned with IAS 24 and any carve-outs should be checked in the current ICAI study material before you write them. Do not state a specific difference in the exam unless you are sure of it.