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CA Intermediate · Advanced Accounting · AS 18 Related Party Disclosures

Kaveri Foods Ltd has a 40-member board. The following relationships exist at the year end: (i) Vikram Traders, a supplier whose only link is that it sold goods to Kaveri Foods all year; (ii) Rao Bros, a bank that gave a loan to Kaveri Foods; (iii) Sunrise Pvt Ltd, in which Kaveri Foods' director Mr. Iyer's wife holds 35% voting power; (iv) Kaveri Foods' own 30% associate, Green Agro Ltd. Which of these are related parties of Kaveri Foods under AS 18?

Only Sunrise Pvt Ltd and Green Agro Ltd are related parties. Sunrise is significantly influenced by the director's wife, a relative of key management personnel, and Green Agro is an associate. A supplier or lender whose only link is ordinary dealings is not a related party under AS 18.

  1. A(i) and (ii) only
  2. B(iii) and (iv) onlyCorrect
  3. C(ii), (iii) and (iv)
  4. D(i), (ii), (iii) and (iv)

Explanation

Sunrise Pvt Ltd is significantly influenced by a relative of key management personnel (35% voting power), and Green Agro is an associate, so both are related parties. A supplier or a lender merely dealing with the enterprise in the normal course is not a related party under AS 18. Hence only (iii) and (iv) qualify.

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