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

Gomti Ltd has several similar transactions with related parties during the year. The accountant plans to combine all items into one total for the note, including purchases from its associate, loans to a director and a large property sale to its parent. Considering the additional clarificatory guidance in paragraph 24A of Ind AS 24 on aggregation, which approach is most consistent with the standard?

Gomti should aggregate only transactions that are similar in nature and disclose dissimilar ones, such as director loans and a major property sale to the parent, separately. Paragraph 24A of Ind AS 24 gives guidance on aggregation so that the related party disclosures remain useful to users.

  1. AAggregate all related party transactions into a single total regardless of nature
  2. BNever aggregate, and disclose every individual invoice separately
  3. CAggregate only items of a similar nature, since combining dissimilar transactions such as loans and a property sale would not give users a proper viewCorrect
  4. DAggregate only transactions with the parent and omit the rest

Explanation

Paragraph 24A is an addition in the Ind AS giving guidance on aggregation of transactions for disclosure. Aggregation is appropriate for items of a similar nature, but separate disclosure is needed when it is necessary to understand the effect on the financial statements. A single total mixing loans, purchases and a property sale would defeat the purpose of disclosure, so that option is wrong.

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