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

Gomti Pharma Ltd's audit committee asks why Ind AS 24 requires disclosure of transactions, outstanding balances including commitments, and relationships with related parties. Which reason does Ind AS 24 give in paragraph 8?

Ind AS 24 requires these disclosures because knowledge of related party transactions, outstanding balances including commitments, and relationships may affect users' assessments of the entity's operations, including the risks and opportunities it faces. The purpose is informing users, not tax computation or remuneration limits.

  1. ASuch knowledge may affect users' assessments of the entity's operations, including the risks and opportunities it facesCorrect
  2. BSuch knowledge is needed to compute the entity's taxable income
  3. CSuch knowledge is needed to fix the managerial remuneration ceiling
  4. DSuch knowledge replaces the need for segment reporting

Explanation

Paragraph 8 states that knowledge of transactions, outstanding balances including commitments, and relationships with related parties may affect assessments of the entity's operations by users, including assessments of risks and opportunities. The other options relate to tax, remuneration or segments, which are not stated purposes.

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