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MCQ Self Challenge # 0078 on Related Party Disclosures under Ind-AS

 

Related Party Disclosures under Ind-AS

 

Dear Professional Seniors & Friends,
Warm Greeting!

Here is the Next post of #MCQ on concept based practical professional knowledge on Related Party Disclosures under Ind-AS in a unique manner to be self answered by participants. The detailed answer of these MCQs shall be posted next day for the self assessment of the participants.

MCQ 78.1: Mr X has significant influence over A ltd. Mr X is also Key Management personnel of C ltd. In Regard to above, which of the following Statement is true

A. A Ltd is related party to C Ltd and Mr X is related party to A Ltd and C Ltd.
B. A Ltd is not related to C Ltd and MR X is related party to A Ltd and C Ltd.
C. A Ltd is related party to C Ltd and Mr X is not related party to A Ltd and C Ltd.
D. A Ltd is not related to C Ltd and Mr X is not related party to A Ltd and C Ltd.

MCQ 78.2: Government Controlled Entity G directly controls Entity 1 and Entity 2. It also indirectly Controls Entity A and Entity B through Entity 1 and Entity C and D through Entity 2. Person X is a key Management personnel in Entity 1. Entity G need to make related party disclosure for:

A. Entity 1 , Entity 2
B. Entity 1 , Entity A, Entity B , Entity 2, Entity C, Entity D
C. All the Parties
D. Person X

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CA Sanjay Kumar Agrawal
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Answer MCQ Self Challenge #0078

 

Dear Professional Seniors & Friends,

Warm Greetings!

 

This post of MCQ is on provisions relating to valuation of Supply under GST in case of related parties.

 

Answer to MCQ 78.1: B) A Ltd is not related to C ltd and MR X is related party to A Ltd and C Ltd.

 

Answer to MCQ 78.2: D) Person X

 

Practical Analysis for MCQ 78.1

  • As per Ind AS -24 for the Entities to be related party following condition applies-
  1. The Entities  needs to be controlled or Jointly controlled by the person to qualify as related Party .
  2. Merely having persons with significant influence or as KMP or as directors in common does not make a related party Relationship.
  3. The Entity reporting Entity are members of the same group
  4. One Entity is associate Joint Venture of Reporting Entity

As no Direct relationship Exists between A Ltd and C Ltd they are not related parties.

As per Ind AS -24 a person or Close member of that person’s family is related to reporting Entity if that person-

  1. Has Control or Joint Control directly or indirectly over that related party
  2. Has significant influence over the reporting Entity
  3. Is member of the key management personnel of the reporting Entity

Here AS Mr X has significant influence and is key management personnel of Reporting Entity he is related to Entity A ltd and Cltd

Based on the above analysis, Correct answer to MCQ 78.1 :   :B)A Ltd is not related to C ltd and MR X is related party to A Ltd and C Ltd

 

 

Practical Analysis for MCQ 78.2

 

  • As Per IND AS -24 Related Party Disclosures there is a special exemption with regard to government controlled Entities.
  • A government controlled Entity is an “Entity that is controlled jointly and significantly influenced by the Government “.
  • Transaction with Government Entities are not to be disclosed .

 

  • Mr X is said to be related party as he has Significant influence on Entity 1. Here Entity G  indirectly represents Entity 1.
  • On the basis of Above Mr X is related part of G and hence disclosure is required .

 

Correct answer to MCQ 78.2 : Person X

 

(Disclaimer: The objective of the MCQ post is just to discuss the concept, it may happen, by change of facts, the answer may be different. Please do not treat this as professional opinion; you can definitely have your own opinion.)

 

Sincere Regards!

 

CA Sanjay Kumar Agrawal

Mobile: 9810116321

To access MCQ posts regularly, please Join Telegram Channel:
https://t.me/caSanjayKumarAgrawal

 

For All MCQ post please click on:

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Linkedin: https://www.linkedin.com/in/ca-sanjay-kumar-agrawal/

 

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