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CA Intermediate · Advanced Accounting · AS 18 Related Party Disclosures

During the year, Kaveri Engineering Ltd sold goods to its subsidiary, Kaveri Components Ltd, at a total price of ₹80 lakh. In its separate financial statements, Kaveri Engineering must disclose under AS 18 the following, among others:

Kaveri Engineering must disclose the related party's name, the nature of the relationship, a description of the transactions, their volume, and the amounts outstanding at the year end. Partial disclosure of only the name, only the volume, or only a combined total does not satisfy AS 18.

  1. AOnly the volume of transactions as a percentage of total sales, with no names
  2. BOnly the name of the related party, and the amount outstanding at year end
  3. COnly the nature of the relationship and the total of all related party transactions combined
  4. DThe name of the transacting related party, the nature of the relationship, a description of the transaction, the volume, and the amounts outstandingCorrect

Explanation

AS 18 requires disclosure of the name of the related party, the nature of the relationship, a description of the transactions, their volume (amount or appropriate proportion), amounts outstanding, provisions for doubtful debts and amounts written off or written back. Disclosure of only part of this information is incomplete. Items may be aggregated by type only where separate disclosure is not necessary for understanding the effect on the financial statements.

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