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FRS 124. RELATED PARTY DISCLOSURES. FOCUS. DISCLOSURE ISSUES: (I) RELATED PARTY R/SHIP (II) RELATED PARTY TRANSACTIONS APPLIED BEGING ON /AFTER 1/10/2006 ADDENDUM FRS 124 EFFECT 3/5/2006:

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frs 124

FRS 124

RELATED PARTY DISCLOSURES

focus
FOCUS
  • DISCLOSURE ISSUES:

(I) RELATED PARTY R/SHIP

(II) RELATED PARTY TRANSACTIONS

  • APPLIED BEGING ON /AFTER 1/10/2006
  • ADDENDUM FRS 124 EFFECT 3/5/2006:

* STATE CONTRLLED ENTITIES (SCE) {E.G STATUTORY BOARDS} X REQ. TO DISCLOSE TRANSACTNS WITH OTHER SCE

related party r ship
RELATED PARTY R/SHIP
  • Para 9:

A party is related to an entity if:

(i) ctrls, is ctrlled, or under common ctrl with the entity (parent co, sub, sub-sub)

(ii) it’s an associate (FRS 128) of the entity

(iii) it’s a jv

(iv) a member (and a close member of family of such indv) of key mgt personnel of the entity/parent

(v) ctrlled, jointly ctrlled or sig influenced by a member (and a close member of family of such indv) of key mgt personnel of the entity/parent

(vi) post-employment benefit plan for the benefit of Nyee of the entity/related party of the entity

key mgt personnel
Key Mgt Personnel
  • Having Authority & Responsibility for:

(i) Plang

(ii) Directg

(iii) Ctrllg

Of the entity’s activities, and include directors of entity

close member of family
Close Member of Family
  • His/her spouse
  • Parent
  • Child (including adopted and step)
  • Brother, sister
  • Spouse of his/her child, brother/sister
exclusion from def of related party
Exclusion from Def of Related Party
  • Para 11

(i) 2 entities simply bec they’ve a director or other member of key mgt personnel in common

(ii) Provider of fin, tradew union, public utilities, govt dept and agencies

(iii) A single customer, supplier, franchiser, distributor or general agent, the entity transacts sig vol of bus merely by virtue of th eresulting economic dependence

effect of related party r ship
Effect of related party r/ship

Related party r/ship has an impact on entity’s finl position and operations

  • Sub : Land bought to hold as invest, parent co may instruct to sell it
  • Sub: Sell stock at margin, but to parent at cost
disclosure of related party info para 12
Disclosure of Related Party Info (Para 12)
  • Ctrl Exists :

(i) To disclose Parent-subsidiary r/ship regardless whether there have been transactions bet related party.

(ii)To disclose name of parent, ultimate ctrlg party, name of entity that produces CFS for public use

continue
Continue
  • Para 16 – To disclose key mgt compensation

Disclosure in total and for each of the categories:

(a) Short term Nyee benefits

(b) Post Nyment benfits

(c) Other long term benefits

(d) Termination benefits

(e) Share-based payments

continue1
Continue…
  • Para 17 -If there have been transact. bet related party, TO DISCLOSE:

(i) Nature of related party r/ship

(ii) Related and relevance info to aid understanding of potential effect of r/ship in finl. Stat

Read further Para 18 – separate disclosure of Para 17 info wrt parent, sub, assoc. jv, key mgt personnel, other related parties

take home notes
Take home notes
  • To disclose in F/S:

(i) Related Party R/ship

(ii) Related Party Transactions

(iii) The importance of the disclosure to users of accounts

(iv) Disclosure in a form of Notes of Accounts