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

Meridian Steels Ltd sells goods to its associate, Ganga Alloys Ltd, on regular credit terms. During the year it made 40 separate sales to Ganga Alloys totalling ₹6 crore, each of a similar nature. The CFO asks whether disclosing only the total is acceptable. Which statement is consistent with Ind AS 24, which includes additional clarificatory guidance on aggregation of transactions in paragraph 24A?

Aggregation of similar transactions is acceptable, guided by the clarification in paragraph 24A of Ind AS 24. Meridian can disclose the ₹6 crore total for the 40 similar sales, unless separate disclosure is needed to understand the effect on the financial statements.

  1. AItems of a similar nature may be disclosed in aggregate, subject to the guidance in paragraph 24A, except where separate disclosure is necessary to understand the effects on the financial statementsCorrect
  2. BEach of the 40 sales must always be disclosed individually, with no aggregation
  3. CAggregation is allowed only across different related parties, never for a single party
  4. DAggregation is allowed only if every transaction is below ₹1 lakh

Explanation

Ind AS 24 includes paragraph 24A, an addition to IAS 24, giving clarificatory guidance on aggregating transactions for disclosure. Similar transactions with a related party can ordinarily be aggregated unless separate disclosure is needed to understand the effect on the financial statements. The monetary threshold and the ban on aggregating for a single party are not in the standard.

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