Task ? 6 Specification: Undertaking “A” owns 75% of ordinary shares of undertaking “B” that, in...

Task ? 6

Specification:

Undertaking “A” owns 75% of ordinary shares of undertaking “B” that, in turn, owns 55% of ordinary shares of undertaking “C”. Undertaking “A” produces the Group’s consolidated financial statements.

Question:

Should the consolidated financial statements disclose related party transactions in respect of intra-group transactions.

Expert Solution

In business, a related party transaction is a transaction that takes place between two parties who hold a pre-existing connection prior to the transaction.

A related party is a person or entity that is related to the entity that is preparing its financial statements

An entity is related to a reporting entity if any of the following conditions applies:

(i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member)
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v) The entity is a post-employment defined benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
(viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity*.
from the above data we can conclude that the consolidated financial statements should disclose the related party transactions in respect of intra group transactions

ekkarill92 answered 1 year ago

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