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CA Intermediate · Advanced Accounting · AS 18 Related Party Disclosures

Kaveri Industries Ltd sold goods to its associate, Godavari Components Ltd, during 2025-26. Which of the following must be disclosed by Kaveri Industries Ltd under AS 18 for this related party transaction?

Kaveri Industries must disclose the name of the related party, the nature of the relationship, a description and volume of the transactions, and the amounts outstanding at year end. Giving only sales totals, balances or profit would be incomplete under AS 18.

  1. AOnly the total sales figure, without naming the associate
  2. BThe name of the transacting related party, description of the relationship, nature and volume of transactions, and outstanding amountsCorrect
  3. COnly the outstanding balance at year end
  4. DOnly the profit earned on the transaction

Explanation

AS 18 requires disclosure of the name of the related party, nature of relationship, description of transactions, the volume (amount or appropriate proportion), amounts outstanding, provisions for doubtful debts due from them and amounts written off or written back. Disclosing only the total, the balance or the profit is incomplete.

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