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ACCA Strategic Professional · Strategic Business Reporting (International) · Other reporting issues

Cedar Group's parent, Cedar Holdings, sold goods to its 100% subsidiary Cedar Retail during the year. Cedar Holdings prepares consolidated financial statements. Which statement is correct under IAS 24?

Intragroup transactions are eliminated on consolidation, so they are not disclosed as related party transactions in the consolidated statements. They must still be disclosed in the separate financial statements of the parent and the subsidiary, regardless of whether pricing was at market value.

  1. AThe transaction is disclosed in the consolidated financial statements as a related party transaction
  2. BThe transaction is eliminated on consolidation and not disclosed in the consolidated statements, but is disclosed in each entity's separate financial statementsCorrect
  3. CThe transaction is never disclosed anywhere because both entities are in the same group
  4. DThe transaction is disclosed in the consolidated statements only if prices differed from market prices

Explanation

Intragroup transactions are eliminated in the consolidated financial statements, so IAS 24 does not require disclosure there. However, related party transactions with group members are disclosed in the parent's and subsidiary's separate (individual) financial statements. Pricing is irrelevant to this requirement.

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