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CA Intermediate · Advanced Accounting · AS 18 Related Party Disclosures

Rohan Ltd. sold goods of Rs 40,00,000 to Sunrise Ltd., its subsidiary, during the year. Rohan Ltd. also sold goods of Rs 10,00,000 to Tara Ltd., a fellow subsidiary of the same parent, and Rs 6,00,000 to Vikas Ltd., an unrelated customer. Under AS 18, what total amount of sales to related parties should Rohan Ltd. disclose as related party transactions in its separate financial statements?

The related party sales to disclose are Rs 50,00,000. Sales to the subsidiary Sunrise Ltd. (Rs 40,00,000) and to the fellow subsidiary Tara Ltd. (Rs 10,00,000) are with related parties under AS 18, while the Rs 6,00,000 sale to Vikas Ltd., an unrelated customer, is excluded.

  1. ARs 40,00,000
  2. BRs 56,00,000
  3. CRs 46,00,000
  4. DRs 50,00,000Correct

Explanation

Subsidiary Sunrise Ltd. (Rs 40,00,000) and fellow subsidiary Tara Ltd. (Rs 10,00,000) are both related parties. Total = 40,00,000 + 10,00,000 = Rs 50,00,000. Vikas Ltd. is unrelated and excluded. Rs 56,00,000 wrongly includes the unrelated customer.

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