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CA Intermediate · Advanced Accounting · AS 18 Related Party Disclosures

Rao Engineering Ltd has the following in the year: it sold goods of Rs 12,00,000 to its holding company; sold goods of Rs 5,00,000 to an associate; paid managerial remuneration Rs 9,00,000 to its Managing Director; and sold goods of Rs 4,00,000 to a company in which the MD's brother has no interest and no influence. As per AS 18, what is the total volume of related party transactions to be disclosed (excluding the remuneration, which is to be shown separately as key management personnel compensation)? Assume the sale of goods only is to be totalled across categories.

The related party sales to be totalled are Rs 17,00,000, being Rs 12,00,000 to the holding company plus Rs 5,00,000 to the associate. The Rs 4,00,000 sale is to an unrelated entity and is excluded, and remuneration is excluded as the question states.

  1. ARs 17,00,000Correct
  2. BRs 26,00,000
  3. CRs 21,00,000
  4. DRs 30,00,000

Explanation

Sales to the holding company (Rs 12,00,000) and the associate (Rs 5,00,000) are related party sales, totalling Rs 17,00,000. The Rs 4,00,000 sale is to an unrelated entity, so it is excluded. Including remuneration (9,00,000) is excluded by the question, so 26,00,000 is wrong. Adding the unrelated sale gives 21,00,000, also wrong.

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