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CA Intermediate · Advanced Accounting · AS 18 Related Party Disclosures

Zenith Ltd's parent, Apex Holdings Ltd, has fully disclosed that it controls Zenith. During the year Zenith had no transactions with Apex or any other related party. Under AS 18, what must Zenith disclose?

Zenith must disclose Apex Holdings as its parent and the nature of the control relationship even though there were no transactions. AS 18 requires disclosure of control relationships irrespective of whether any transactions took place between the enterprises during the period.

  1. ANothing, because no transactions took place
  2. BThe parent's name only if the parent prepares consolidated statements
  3. CThe name of the related party, and the nature of the relationship, since control exists, even with no transactionsCorrect
  4. DOnly the amount of the parent's investment in Zenith

Explanation

AS 18 requires that where control exists, the relationship between parent and subsidiary is disclosed irrespective of whether there have been transactions between them. Disclosure covers the name of the related party and the nature of the relationship. So absence of transactions does not remove the requirement.

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