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

Ganga Pharma Ltd has a wholly owned subsidiary that carried out no transactions with it during the year. The CFO proposes to skip all disclosure about the subsidiary relationship, arguing there is nothing to report because no transactions occurred. What is the correct view under Ind AS 24, given the modified paragraph 14 in the Indian standard?

The relationship must still be disclosed. Ind AS 24 paragraph 14, as modified, explains the rationale for disclosing a related party relationship where control exists, so the absence of transactions with the wholly owned subsidiary does not remove the need to disclose the relationship.

  1. ADisclosure of the relationship is still needed, since paragraph 14 explains the rationale for disclosing related party relationships where control existsCorrect
  2. BNo disclosure is needed because disclosure arises only when transactions take place
  3. CDisclosure is needed only if the subsidiary is loss making
  4. DDisclosure is needed only if the subsidiary is listed

Explanation

Paragraph 14 was modified in Ind AS 24 to explain the rationale for disclosing the related party relationship when control exists. Disclosure of the control relationship therefore does not depend on transactions having occurred. The other options introduce conditions the standard does not impose.

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