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CA Intermediate · Advanced Accounting · AS 18 Related Party Disclosures

Which of the following is a required disclosure under AS 18 when there have been transactions between related parties during the period?

The enterprise must disclose the name of the related party, the nature of the relationship, a description of the transactions, their amounts and the outstanding balances. AS 18 requires this regardless of whether the transactions were at arm's length, and the related party's profit is not the test.

  1. AOnly the names of the directors of the enterprise
  2. BThe name of the transacting related party, nature of relationship, and amount of transactions and outstanding balances, among other itemsCorrect
  3. COnly the profit earned by the related party on the transactions
  4. DOnly the transactions that were not at arm's length price

Explanation

AS 18 requires disclosure of the nature of relationship, description of transactions, volume (amount) of transactions, outstanding balances and provisions for doubtful debts due from related parties, among others. It does not limit disclosure to non-arm's-length deals or to the related party's profit.

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