Transactions
A person who has control over the reporting entity had a transaction that is material with the entity, should they disclose it? Yes or no
Yes
Are close family members considered related party? True or false
True
Who are the key management personnel discussed in related party disclosure?
Directors, CEO, CFO, senior managers, top management.
Why related party disclosure is important?
To ensure financial report users have sufficient information to make useful decision
If a family member of a key management personal owns no share to the reporting entity but has a transaction that is material, should the company disclose the transaction? Why?
Yes, IAS24 states a transaction from family member of key management personal should be disclosed because it can affect user's decision making.
What should Cenovus energy do if Cenovus energy has no transaction with HMLP (HUSKY)?
Cenovus energy should state the relationship between them and HUSKY under IAS 24.13
A person and/or entity that is related to the reporting entity including key management person and family members
Name one of each of the following:
1) Who are the related parties
2) Who are not the related parties
3) Who are exempt from related parties disclosure
1) person, entity
2) Two entities sharing the same key personal management, two joint ventures
3) Government, entity that shares the same government control.
Elon Musk (CEO of Tesla) withdrew $5000 of allowance from Tesla(multimillion dollar company) which he has significant control over, should he disclose it under related party on the financial statement? Why?
Yes, because he is a key management personnel, although it is immaterial, but under IAS24.17 (a) short term benefit which includes allowance should be reported
Company A and Company B both have Ms. Chen on their boards of directors. She does not control either company, and she does not own significant shares in either.
Question:
Are Company A and Company B related parties under IAS 24?
24.11 In the context of this Standard, the following are not related parties:
(a) two entities simply because they have a director or other member of key management personnel in common or because a member of key management personnel of one entity has significant influence over the other entity.
Lists four types of transaction from a key management personnel
1) Short term benefit
2) Post employment benefit
3) Other long term benefit
4) Termination benefit
5) Share-based payment
Should a transaction of Superstore with Shoppers Drugmart be disclosed in the consolidated financial statement? Why?
No, they do not need to disclose because they are both subsidiary company of Loblaw and Loblaw consolidate their financial statement under one annual report.