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CA Intermediate · Advanced Accounting · AS 18 Related Party Disclosures

Anand, a key management personnel of Zenith Ltd., has a relative Mr. Bhaskar, who is a son living with him. Zenith Ltd. paid Rs 5,00,000 to Bhaskar's proprietary firm for consultancy. Under AS 18, which statement is correct for Zenith Ltd.'s disclosure?

Zenith Ltd. must disclose the transaction, because Bhaskar's proprietary firm is an enterprise over which a relative of key management personnel has significant influence. AS 18 includes such enterprises as related parties and prescribes no minimum amount for disclosure.

  1. ANo disclosure, as relatives are excluded from AS 18
  2. BDisclose the firm as an enterprise over which a relative of KMP has significant influenceCorrect
  3. CDisclose only if the payment exceeds Rs 10,00,000
  4. DDisclose only Anand's remuneration, not payments to firms

Explanation

AS 18 treats enterprises over which a key management personnel or a relative of such personnel has significant influence as related parties. A proprietary firm of the KMP's son qualifies. AS 18 has no monetary threshold for disclosure.

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