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CA Intermediate · Advanced Accounting · AS 18 Related Party Disclosures

Himalaya Ltd. sold goods to its subsidiary Shivalik Ltd. for ₹40,00,000 and to its associate Ganga Ltd. for ₹25,00,000. It also paid ₹12,00,000 as remuneration to its managing director. In the separate financial statements of Himalaya Ltd., what is the aggregate value of the related party sales to be reported as sales transactions (excluding remuneration)?

The aggregate related party sales are ₹65,00,000, being ₹40,00,000 to the subsidiary plus ₹25,00,000 to the associate. Remuneration paid to the managing director is a separate type of transaction and must not be added to sales.

  1. A₹40,00,000
  2. B₹25,00,000
  3. C₹65,00,000Correct
  4. D₹77,00,000

Explanation

Both Shivalik (subsidiary) and Ganga (associate) are related parties. Sales to them total 40,00,000 + 25,00,000 = ₹65,00,000. Adding the remuneration of ₹12,00,000 gives ₹77,00,000, which is wrong since remuneration is not a sale.

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