Related-party Disclosures

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An Overview of the International External Reporting Environment
The Conceptual Framework of Accounting and Its Relevance to Financial Reporting
Theories of Financial Accounting
An Overview of Accounting for Assets
Depreciation of Property, Plant and Equipment
Revaluations and Impairment Testing of Non-Current Assets
Inventory
Accounting for Intangibles
An Overview of Accounting for Liabilities
Accounting for Leases
Share Capital, Reserves and Share Options Employee Bonus Schemes
Accounting for Financial Instruments
Revenue Recognition Issues
The Statement of Comprehensive Income and Statement of Changes in Equity
Accounting for Income Taxes
The Statement of Cash Flows
Events Occurring After the Reporting Date
Related-Party Disclosures
Earnings Per Share
Further Consolidation Issues I: Accounting for Intragroup Transactions
Further Consolidation Issues II: Accounting for Non-Controlling Interests
Further Consolidation Issues III: Accounting for Indirect Ownership Interest
Accounting for Foreign Currency Transactions
Translating the Financial Statements of Foreign Operations
Accounting for Corporate Social Responsibility

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Question 1

Free

True/False

In IAS 24 Related Party Disclosures,two entities having a director in common are assumed related parties.

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Question 2

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True/False

A major supplier with whom an entity transacts a significant volume of business is considered a related party in IAS 24 Related Party Disclosures.

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Question 3

Free

True/False

IAS 24 Related Party Disclosures,requires relationships between parents and subsidiaries be disclosed irrespective of whether there have been transactions between those related parties.

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Question 4

Free

True/False

In order for two parties to be related they must be under the common control or influence of a third party.

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Question 5

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True/False

Related parties are not considered to be interdependent.

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Question 6

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IAS 24 reflects the view that transactions carried out by related parties cannot be presumed to be at arm's length.

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Question 7

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Related-party transactions pose serious risks to the reporting entity and generate no benefits.

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Question 8

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In order for control to exist as the basis for a related-party disclosure the capacity to control must have been demonstrated as having been exercised in the past.

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Question 9

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The most common example of a relationship reflecting control is that between an investor and its associate company.

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Question 10

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Entities that have a controlling entity in common are considered to be 'other related parties'.

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Question 11

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A close family member of someone who is key management personnel is considered to be a related party.

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Question 12

True/False

IAS 24 requires a standard,detailed set of disclosure requirements for all related-party transactions.

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Question 13

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A related party relationship can affect the profit and loss of an entity.

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Question 14

True/False

Transactions involving related parties cannot be presumed to be carried out on an arm's length basis.

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Question 15

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An alternate director who is not acting in that capacity is considered a related party in IAS 24.

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Question 16

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Good corporate governance recommends a renumeration report be included in the financial statements.

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Question 17

Multiple Choice

Reasons for the requirement to disclose related-party transactions include:

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the risk that the performance and position of the reporting entity will be negatively affected by the transactions.

key stakeholders of the entity include related parties who should be kept informed of their transactions.

they may be used to minimise total taxation payable by a group of related entities.

the risk that the performance and position of the reporting entity will be negatively affected by the transactions and related-party transactions may be used to minimise total taxation payable by a group of related entities.

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Question 18

Multiple Choice

Reasons for the requirement to disclose related-party transactions include:

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These transactions will always be eliminated in a consolidation so otherwise there would be no record of them in a set of consolidated accounts.

There is a history of corporate scandals involving related-party transactions in Europe, Australia, the US, and Canada.

There is a risk that the auditor may be a related party and this must be disclosed.

There is a history of corporate scandals involving related-party transactions in Europe, Australia, the US, and Canada and a risk that the auditor may be a related party and this must be disclosed.

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Question 19

Multiple Choice

A related-party transaction is material if:

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Its omission from the report or misstatement would result in significant financial disadvantage to a third party, whether it be an owner, debt-holder or other stakeholder, or if it involves the auditor.

Its omission, non-disclosure or misstatement has the potential to affect decisions about the allocation of scarce resources by users of the accounts and consolidated accounts, or the discharge of accountability by directors or if it is a transaction by a director with the reporting entity.

Its omission from the report or misstatement would result in the accounts not providing an accurate representation of the financial position or performance of the reporting entity, or if it is a transaction by any member of the senior management of the reporting entity.

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Question 20

Multiple Choice

A frequently applied practice in relation to the disclosure of related-party transactions of directors is to:

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make a general statement that there were some transactions.

not report that there were any transactions.

state that the transaction is at arm's length terms and conditions.

specify the number, nature and amount of the transactions with comparisons to arm's length transactions of a similar nature and type.

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