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CA Intermediate · Advanced Accounting · AS 18 Related Party Disclosures

Which of the following parties would be deemed a related party of a reporting enterprise under AS 18 solely by virtue of the relationship described?

An associate of the reporting enterprise is a related party under AS 18, since associates are expressly included in the defined categories. Banks, trade unions and economically dependent customers are not related parties merely through their normal dealings or dependence.

  1. AA bank providing normal financing to the enterprise
  2. BA single customer contributing 60% of the enterprise's revenue, with economic dependence only
  3. CAn associate of the reporting enterpriseCorrect
  4. DA trade union with which the enterprise negotiates wages

Explanation

AS 18 lists associates and joint ventures as related parties. Providers of finance, trade unions, public utilities and a customer or supplier with whom significant business is done merely because of economic dependence are not related parties by that fact alone.

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