Skip to content

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

Tarang Infra Ltd controls Tarang Roads Ltd. During the year there were no transactions between them at all. The preparer argues that, since there were no transactions, no mention of the relationship is needed. Which of the following best reflects the Ind AS 24 position, including the rationale in the modified paragraph 14 and the purpose set out in paragraph 8?

Tarang must still disclose the controlling relationship. Ind AS 24 explains the rationale for disclosing related party relationships when control exists, and the purpose is that knowledge of relationships, not just transactions, may affect users' assessments of operations, risks and opportunities.

  1. ANo disclosure, because disclosure is triggered only by transactions during the period
  2. BDisclosure of the relationship is required only if outstanding balances exist at the year-end
  3. CDisclosure of the relationship is required only if the subsidiary is loss-making
  4. DThe relationship must be disclosed where control exists, because knowledge of relationships with related parties may affect users' assessment of the entity's operations, risks and opportunities, even without transactionsCorrect

Explanation

Paragraph 14 of Ind AS 24 was modified to explain the rationale for disclosing a related party relationship when control exists. Paragraph 8 says knowledge of transactions, outstanding balances including commitments, and relationships with related parties may affect users' assessments of operations, risks and opportunities. Hence the controlling relationship is disclosed even with no transactions. The balance-based and loss-based triggers are invented.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 24 Related Party Disclosures shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 24 Related Party DisclosuresFree diagnostic mock

More Ind AS 24 Related Party Disclosures questions