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

Rudra Engineering Ltd, an unlisted company, is controlled by Rudra Holdings Pvt Ltd. There were no transactions between the two during the year. The CFO proposes to omit any mention of Rudra Holdings because there were no transactions. What does Ind AS 24 require, based on the modified paragraph 14 explaining the rationale for disclosing a relationship where control exists?

Rudra Engineering must disclose its relationship with Rudra Holdings even though there were no transactions. Ind AS 24 paragraph 14 treats control as a relationship that is disclosed because it may affect the entity's operations, so the absence of dealings does not remove the requirement.

  1. ANo disclosure is needed since there were no transactions
  2. BDisclosure of the relationship is required only if transactions occurred in the previous year
  3. CDisclosure is needed only if Rudra Holdings holds more than 75% of the shares
  4. DThe relationship between parent and subsidiary should be disclosed irrespective of whether any transactions took place, because control can affect the entity's operationsCorrect

Explanation

Paragraph 14, as modified in the Ind AS, explains the rationale for disclosing a related party relationship when control exists. Hence the relationship is disclosed even when there were no transactions. The CFO's view fails because the disclosure duty arises from control itself and not from transactions.

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