Page 548 - F2 Integrated Workbook STUDENT 2019

F2: Advanced Financial Reporting

CHAPTER 10 – RELATED PARTIES

10.1 D

Suppliers and customers are not considered related parties per IAS 24. A loan
to a supplier is not a related party transaction. No disclosure is necessary.

Transactions with close family members of key management personnel and
entities controlled by related parties (e.g. controlled by close family members of
key management personnel) are considered related parties. Therefore, A and B
are related party transactions. Disclosure of the transactions is required.

Associates are deemed to be related parties. Therefore, a loan to an associate
from its parent company is a related party transaction and would be disclosed.

10.2 B

Disclosure can highlight where undue influence is being exerted by related
parties. This will be of interest to the users of the accounts to identify non-
economic transactions with no commercial value e.g. transactions with no
consideration. As long as transparency exists and disclosure occurs, related
party transactions are a common occurrence and necessary in numerous
businesses operations.

Related party transactions are part of everyday business and are not illegal. So
A is inaccurate.

Suppliers, financiers, customers and trade unions are specified by IAS 24 as
not considered as related parties. Therefore, C is inaccurate.

Intergroup transactions should be eliminated from the group accounts.
Therefore, the purpose of related party transactions is not to quantify intergroup
transactions within the consolidated accounts. There is nothing to quantify as
the transactions are not included in the financial statements of the group.

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