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

Sagar Pharma Ltd. controls Tidal Labs Ltd. Sagar and Tidal had no transactions during the year. Tidal's finance head argues that, with no transactions, no related party disclosure about Sagar is needed in Tidal's financial statements. Under Ind AS 24, as modified in paragraph 14 to explain the rationale for disclosing the relationship when control exists, what is the correct position?

The relationship must be disclosed even though there were no transactions. Ind AS 24 requires disclosure of control relationships regardless of transactions, since control may affect the entity's results and financial position, a rationale explained in the modified paragraph 14.

  1. ANo disclosure is needed since there were no transactions
  2. BDisclosure of the relationship is needed only if Tidal makes losses
  3. CDisclosure of the relationship is needed only when balances are outstanding
  4. DThe relationship must be disclosed even without transactions, because control can affect the entity's results and positionCorrect

Explanation

Ind AS 24 requires disclosure of control relationships irrespective of whether there were transactions, because the controlling party can influence the entity's dealings. Paragraph 14 was modified to explain this rationale. Dependence on transactions or balances applies to other disclosures, not to the control relationship.

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