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CA Intermediate · Advanced Accounting · AS 18 Related Party Disclosures

Vikram Steels Ltd, a state-government-controlled enterprise, deals with other state-controlled enterprises. During the year it sold steel to another state-controlled company, Gati Power Ltd, for Rs 90 lakh and also sold goods for Rs 20 lakh to Mr. Sinha, a Director of Vikram Steels. Under AS 18, which treatment is correct?

The Rs 90 lakh sale to Gati Power need not be disclosed because AS 18 exempts transactions between state-controlled enterprises. The exemption does not cover key management personnel, so the Rs 20 lakh sale to Director Mr. Sinha must be disclosed. No value threshold exists.

  1. ADisclose both Rs 90 lakh and Rs 20 lakh transactions
  2. BExempt from disclosure for the Rs 90 lakh sale to Gati Power merely due to state control; disclose Rs 20 lakh sale to Mr. SinhaCorrect
  3. CExempt both because Vikram Steels is state-controlled
  4. DDisclose Rs 90 lakh sale but exempt Rs 20 lakh as it is below Rs 1 crore

Explanation

AS 18 exempts state-controlled enterprises from disclosing transactions with other state-controlled enterprises. This exemption does not extend to key management personnel. The Rs 90 lakh sale to Gati Power is therefore exempt, while the Rs 20 lakh sale to Mr. Sinha must be disclosed. No monetary threshold applies.

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