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Questions and Answers
What is the primary objective of IAS 24?
What is the primary objective of IAS 24?
- To regulate the compensation of key management personnel
- To provide guidance on accounting for transactions with non-related parties
- To ensure compliance with financial reporting requirements
- To draw attention to the possibility that an entity's financial position and profit or loss may have been affected by related parties and transactions (correct)
Which of the following is NOT a related party according to IAS 24?
Which of the following is NOT a related party according to IAS 24?
- A subsidiary of the reporting entity
- A key management personnel of the reporting entity
- A parent company of the reporting entity
- A customer of the reporting entity (correct)
What is a related party transaction according to IAS 24?
What is a related party transaction according to IAS 24?
- A transfer of resources, services, or obligations between unrelated parties
- A transfer of resources, services, or obligations between related parties, regardless of whether a price is charged (correct)
- A transaction between a parent company and its subsidiary
- A transaction between two unrelated entities
When did the reissued IAS 24 come into effect?
When did the reissued IAS 24 come into effect?
What is the effective date of the requirement added by Annual Improvements to IFRSs 2010–2012 Cycle?
What is the effective date of the requirement added by Annual Improvements to IFRSs 2010–2012 Cycle?
What information must an entity disclose regarding its parent and ultimate controlling party?
What information must an entity disclose regarding its parent and ultimate controlling party?
What is the definition of key management personnel?
What is the definition of key management personnel?
What must an entity disclose if it obtains key management personnel services from a separate management entity?
What must an entity disclose if it obtains key management personnel services from a separate management entity?
What must be disclosed about related party transactions?
What must be disclosed about related party transactions?
Under what conditions can an entity make a statement that related party transactions were made on terms equivalent to those that prevail in arm's length transactions?
Under what conditions can an entity make a statement that related party transactions were made on terms equivalent to those that prevail in arm's length transactions?
Study Notes
IAS 24 Overview
- IAS 24 was reissued in November 2009 and applies to annual periods beginning on or after 1 January 2011.
- The standard requires disclosures about transactions and outstanding balances with an entity's related parties.
Related Parties
- A related party is a person or entity that is related to the entity that is preparing its financial statements (referred to as the 'reporting entity').
- The following are deemed not to be related parties: [IAS 24.11]
Related Party Transactions
- A related party transaction is a transfer of resources, services, or obligations between related parties, regardless of whether a price is charged.
- Disclosure requirements include:
- The nature of the related party relationship
- Information about the transactions and outstanding balances necessary for an understanding of the potential effect of the relationship on the financial statements
Disclosure Requirements
- Relationships between parents and subsidiaries:
- Disclose the name of the parent and, if different, the ultimate controlling party
- If neither the parent nor the ultimate controlling party produces financial statements available for public use, disclose the name of the next most senior parent that does so
- Management compensation:
- Disclose key management personnel compensation in total and for each of the following categories: [IAS 24.17]
- Key management personnel are those persons having authority and responsibility for planning, directing, and controlling the activities of the entity
- If an entity obtains key management personnel services from a management entity, disclose the amounts incurred by the entity for the provision of key management personnel services that are provided by the separate management entity
Effective Dates
- IAS 24 applies to annual periods beginning on or after 1 January 2011
- Amendments introduced by Annual Improvements to IFRSs 2010–2012 Cycle are effective for annual periods beginning on or after 1 July 2014
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Description
This quiz covers IAS 24, a standard that requires disclosures about transactions and outstanding balances with an entity's related parties, including compensation of key management personnel.
