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

Ind AS 24 states a reason why related party disclosures are required. Which statement best reflects that reason as given in the standard text?

The purpose is to give users information that may affect their assessment of the entity's operations. Ind AS 24 says knowledge of transactions, outstanding balances including commitments, and relationships with related parties can influence assessments of the risks and opportunities facing the entity.

  1. ATo ensure all transactions with related parties are priced at arm's length
  2. BTo restrict the entity from entering into transactions with related parties
  3. CTo enable users to assess the entity's operations, because knowledge of transactions, outstanding balances including commitments, and relationships with related parties may affect assessments of risks and opportunitiesCorrect
  4. DTo reduce the tax liability of the entity on transactions with related parties

Explanation

Paragraph 8 states that knowledge of an entity's transactions, outstanding balances including commitments, and relationships with related parties may affect assessments of its operations by users, including assessments of the risks and opportunities facing the entity. The other options describe pricing, restriction or tax aims, which are not the purpose of Ind AS 24.

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