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CA Intermediate · Advanced Accounting · AS 18 Related Party Disclosures

Sunrise Foods Ltd is a wholly owned subsidiary of Sunrise Holdings Ltd. During the year there were transactions between the two. Sunrise Foods Ltd's financial statements are prepared as a separate company. Under AS 18, which statement is correct about disclosure of the name of the holding company?

Sunrise Foods Ltd must disclose the name of its holding company regardless of whether any transactions took place. AS 18 requires disclosure of control relationships, including parent-subsidiary, even without transactions, and wholly owned status gives no exemption.

  1. ADisclosure is required only if transactions occurred in the year, not otherwise
  2. BDisclosure is required only in consolidated financial statements
  3. CDisclosure of the holding company's name is required irrespective of whether there were transactionsCorrect
  4. DNo disclosure is needed because the subsidiary is wholly owned

Explanation

AS 18 requires that, where control exists, the related party relationship and the name of the transacting related party be disclosed irrespective of whether there have been transactions between the parties. The parent-subsidiary relationship is therefore disclosed even when no transactions occur, and full ownership gives no exemption.

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