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The IAS 24 related party disclosures is just to do with disclosure of the related parties not the accounting treatment of it.

IAS 24 just discloses there is a possibility that results may be affected by buying or selling things from/to related parties.

What?

  • Parties are related if one party has control or significant influence over the other party.
  • Related party transactions are transactions between related parties.

Scenarios:

  • If A controls(>50%) or joint controls(=50%) B and have significant influence over C then A&B are related parties, A&C are related parties as well. Also B&C are related parties because A could have power to force one sub to do something against another.
  • If A have significant influence over B&C then A&B, A&C are related parties but B&C are not related parties because A can’t control over B or C to do something.
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  • If a person has significant influence or control over A then this person&A are related parties. (particularly if this person is a member of the key management team in A or close family)
  • IAS 24 states there are particularly some situations which may be related parties transactions:
    • Associate and subsidiary
    • Key management
    • Post-employment benefit: pension plan
    • Close family
  • So what should we disclose under IAS 24 related party disclosures?
    • Transaction: purchase/sale of goods?
    • Parties: X Company; Y Company.
    • Relationship: eg, parent and subsidiary
    • Value: $
    • Date