IAS 24 just discloses there is a possibility that results may be affected by buying or selling things from/to related parties.
- Parties are related if one party has control or significant influence over the other party.
- Related party transactions are transactions between related parties.
- 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.
- 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: $