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CA Final · Financial Reporting · Ind AS 24 Related Party Disclosures

Arjun Pharma Ltd sold goods to its joint venture, Bharat Meds Ltd, in a number of small transactions during the year, as follows: Rs 40 lakh in April, Rs 35 lakh in July, Rs 50 lakh in October and Rs 25 lakh in January. All are of a similar nature with the same party. The accountant proposes to omit disclosure because each is individually below Rs 60 lakh, an internal threshold. Based on Ind AS 24, including the additional clarificatory guidance on aggregation, which approach is appropriate?

Arjun Pharma should disclose the similar transactions with Bharat Meds in aggregate, a total of Rs 150 lakh, rather than omitting them. Paragraph 24A of Ind AS 24 gives guidance permitting aggregation of similar transactions, but an internal per-transaction threshold does not justify omission.

  1. AOmit all four transactions, as each is below the internal threshold
  2. BDisclose only the largest transaction of Rs 50 lakh
  3. CDisclose items of a similar nature in aggregate, Rs 150 lakh, as aggregation is permitted by the guidance, rather than omitting themCorrect
  4. DDisclose only the transactions of the first half-year

Explanation

Ind AS 24 includes paragraph 24A, giving clarificatory guidance on aggregation of transactions for disclosure. Items of a similar nature may be disclosed in aggregate, but they cannot be left out because each is individually small. The total is 40+35+50+25 = Rs 150 lakh, so the disclosure should show Rs 150 lakh.

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