Question

If there have been transactions between related parties, disclosure regarding the nature of the related party relationship needs to be made as well as information about the transactions and outstanding balances necessary for an understanding of the potential effect of the relationship on the financial statements.

What are some of the disclosures that need to be made separately for each category of related parties in a related party transaction?

Answer 1

Disclosure with regard to each Category of related parties in a related party transactions:

1)

Name of related parties: Name of each and every related party should be disclosed.

2)

Relationship with related party: Relationship with related party of directors or other employees should be disclosed.

3)

Nature of transaction: Nature of transaction with related party must be disclosed. Nature means that transaction is in the nature of loan or sale of goods or remuneration etc.

4)

Volume of transaction:

Volume of transaction with related party must be disclosed. Volume of transaction means how much amount of goods sold to related party or what rate of interest has been charged to related party on loan given to related party etc.

5)

Amount of discount or baddebts from related party: If there is any discount or baddebts from related party then amount of discount or bad debts must be disclosed.

6)

Amount of outstanding balance from or to related party:

Amount of outstanding balance from related party or to related party must be disclosed at the year end.