Task ? 2 Specification: Alfa undertaking owns 70% of shareholders’ equity of Beta subsidiary undertaking. Mr....

Task ? 2

Specification:

Alfa undertaking owns 70% of shareholders’ equity of Beta subsidiary undertaking. Mr. Ivanov, Director of Beta undertaking owns the other 30% shares of Beta undertaking. Beta undertaking sold real property to Mr. Ivanov for 3 000. Mr. Ivanov is not a director of Alfa undertaking.

Question:

How should the management disclose the sale of the subsidiary’s real property to the director of the subsidiary:

a) in separate financial statements of Beta subsidiary undertaking;

b) in the Group’s consolidated financial statements?

Solutions

Expert Solution

Related party relationships are a normal feature of commerce and business. For example, entities frequently carry on parts of their activities through subsidiaries, joint ventures and associates. In those circumstances, the entity has the ability to affect the financial and operating policies of the investee through the presence of control, joint control or significant influence

Relationships between a parent and its subsidiaries shall be disclosed irrespective of whether there have been transactions between them. An entity shall disclose the name of its parent and, if different, the ultimate controlling party. If neither the entity’s parent nor the ultimate controlling party produces consolidated financial statements available for public use, the name of the next most senior parent that does so shall also be disclosed

from the above we can conclude that it is a related party transaction therefore it should be disclosed in beta subsidiary undertaking and the group's consolidated financial statements

ekkarill92 answered 1 year ago

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