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FRS 124 Related Party (“RP”) Disclosures

FRS 124 Related Party (“RP”) Disclosures. Introduction : Transaction between RP are frequent occurrences in the normal course of business FRS 124 is applicable to the separate financial statements of a parent, venturer or investor presented in accordance with FRS 127. 1.RP Relationship (“RPR”).

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FRS 124 Related Party (“RP”) Disclosures

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  1. FRS 124 Related Party (“RP”) Disclosures Introduction: • Transaction between RP are frequent occurrences in the normal course of business • FRS 124 is applicable to the separate financial statements of a parent, venturer or investor presented in accordance with FRS 127

  2. 1.RP Relationship (“RPR”) • A party is related to an entity if (para 9): • -The party controls, is controlled by, or is under common control with the entity • -The party is associate • -The party is a JV in which the entity is a venturer • -The party is a member of the key management personnel (CEO and director) of the entity or its parent • -The party is a close member of the family of any individual (pg 378) • -The party is an entity that is controlled, joint controlled or significantly influenced by a member of the key management personnel (“KMP”) or close member of family • -The party is a post-employment benefit plan for the benefit of employee of the entity

  3. Para 11 specifically excluded the following which are not necessarily RP: • 2 entities simply because they have a director or other member of KMP in common • 2 venturers simply because they share joint control over a JV • Provider of finance, trade union, public utilities, and government departments and agencies;and • A customer, supplier, franchiser, distributor or general agent with whom a an entity transacts a significant volume of business, merely by virtue of the resulting economic dependence

  4. 2 RP Transaction (“RPT”) • FRS 124 defines RPT as “ a transfer of resources, services or obligation between RP, regardless of whether a price is charged” • Pls provide some example

  5. 3 Disclosure • A RPR may have an effect on the financial position and operating results of the reporting entity • Disclosure requirement of RPR and RPT can be summarised into 3 parts • (a) Disclosure of control (para 12) • Disclose the name of its parent and, if different, the ultimate controlling party, regardless of whether there have been transaction

  6. (b) Disclosure of KMP compensation (Para 16) • An entity shall disclose in total and for each of the following categories: • -short term employee benefits • -post employment benefits • -other long-term benefits • -termination benefits; and • -share-based payment

  7. (c) Disclosures of transaction and balances (para 17) • If there have been transaction between RP, an entity should disclose: • - the amount of the transaction • - the amount of the outstanding balances • - provision for doubtful debts related to the amount of outstanding balances • - the expense expense recognised during the period in respect of bad or doubtful debts due from RP

  8. The disclosure as per para 17 shall be made separately for: • -parent • -entities with joint control or significant influence over the entity • -subsidiaries • -associates • -JV • -KMP of the entity or its parent; and • -other RP

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