Skip to content

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

Zenith Ltd's key management personnel receive: short-term salaries of $900,000, a post-employment pension contribution of $120,000, and share options with an expense of $150,000 for the year. Zenith also paid $60,000 to a consultancy owned by a director's spouse for advice. Under IAS 24, what must Zenith disclose as key management personnel compensation, and how is the consultancy payment treated?

Key management compensation is $1,170,000, being salaries, pension and share-based payment, disclosed in total and by category. The $60,000 paid to the consultancy linked to a director's spouse is not compensation; it is a separate related party transaction requiring its own disclosure of nature, amount and balances.

  1. ACompensation of $1,170,000 in total, analysed by category; the consultancy payment is disclosed separately as a related party transactionCorrect
  2. BCompensation of $1,230,000 in total, because the consultancy payment is part of compensation
  3. CCompensation of $900,000 only, because pensions and share options are not compensation
  4. DCompensation of $1,170,000 in total; the consultancy payment need not be disclosed because it is below the director's salary

Explanation

Compensation includes short-term benefits, post-employment benefits and share-based payment: 900,000 + 120,000 + 150,000 = $1,170,000, disclosed in total and by category. The $60,000 is a transaction with an entity controlled or significantly influenced by a close family member, so it is a separate related party transaction, not compensation. Adding it to compensation (1,230,000) mixes the two.

Did you get it right without looking?

One question tells you little. A timed set on Other reporting issues shows your real accuracy, how long you take and where you lose marks.

Practise Other reporting issuesFree diagnostic mock

More Other reporting issues questions