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ACCA Strategic Professional · Strategic Business Reporting (International) · Other reporting issues

Which of the following parties is a related party of Birch Ltd under IAS 24?

A joint venture in which Birch is a venturer is a related party of Birch under IAS 24. Entities are not related merely because of economic dependence, such as a lender or major customer, and two venturers are not related solely through joint control of a third entity.

  1. AA bank that provides Birch with a large loan and normal banking services
  2. BA major customer that accounts for 40% of Birch's revenue purely through normal trading
  3. CA joint venture in which Birch is a venturer, where Birch has joint controlCorrect
  4. DTwo venturers that jointly control a third entity, as regards each other, simply because of that joint control

Explanation

A joint venture of the reporting entity is a related party under IAS 24. Lenders and customers with only normal dealings are not related parties merely through economic dependence, and two venturers are not related to each other solely because they share joint control of a venture.

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