Question 1

Which of the following parties is/are covered by the definition of a related party in IAS 24?

Accepted Answer

A) independent directors 
B) chief executive officer 
C) son-in-law of an executive director 
D) all of the given answers 
A) independent directors 
B) chief executive officer 
C) son-in-law of an executive director 
D) all of the given answers

Question 2

Which of the following is typically a related-party transaction within the provisions of IAS 24 Related Party Disclosures?

Accepted Answer

A) transactions between two entities with a common non-executive director 
B) transactions between two entities that share control over another joint venture 
C) transactions between an entity and its biggest finance provider 
D) transactions between entities under common control of another entity 
A) transactions between two entities with a common non-executive director 
B) transactions between two entities that share control over another joint venture 
C) transactions between an entity and its biggest finance provider 
D) transactions between entities under common control of another entity

Question 3

A close family member of someone who is key management personnel is considered to be a related party.

Accepted Answer

A) True 
 B)False

Question 4

The most common form of relationship based on significant influence is that between:

Accepted Answer

A) subsidiary and parent entity. 
B) associate and parent entity. 
C) investor and its associate. 
D) subsidiary and another subsidiary. 
A) subsidiary and parent entity. 
B) associate and parent entity. 
C) investor and its associate. 
D) subsidiary and another subsidiary.

Question 5

The disclosures required by IAS 24 for key management personnel include:

Accepted Answer

A) the name of the person. 
B) the position held. 
C) dates identifying the period of responsibility. 
D) all of the given answers. 
A) the name of the person. 
B) the position held. 
C) dates identifying the period of responsibility. 
D) all of the given answers.

Question 6

What additional disclosures are required of disclosing entities with regards to related-party transactions?

Accepted Answer

IAS 24 requires various items of disclos

Question 7

Which of the following statements is not in accordance with IAS 24 Related Party Disclosures?

Accepted Answer

A) A related-party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged. 
B) If there have been transactions between related parties, an entity shall disclose the nature of the related party relationship as well as information about the transactions and outstanding balances necessary for an understanding of the potential effect of the relationship on the financial statements. 
C) Transactions between the reporting entity and its key management personnel are deemed material. 
D) In IAS 24 Related Party Disclosures, two entities having a director in common are assumed related parties. 
A) A related-party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged. 
B) If there have been transactions between related parties, an entity shall disclose the nature of the related party relationship as well as information about the transactions and outstanding balances necessary for an understanding of the potential effect of the relationship on the financial statements. 
C) Transactions between the reporting entity and its key management personnel are deemed material. 
D) In IAS 24 Related Party Disclosures, two entities having a director in common are assumed related parties.

Question 8

Entities that have a controlling entity in common are considered to be 'other related parties'.

Accepted Answer

A) True 
 B)False

Question 9

The most common example of a relationship reflecting control is that between an investor and its associate company.

Accepted Answer

A) True 
 B)False

Question 10

Good corporate governance recommends a renumeration report be included in the financial statements.

Accepted Answer

A) True 
 B)False

Question 11

IAS 24 provides guidance regarding the measurement of remuneration amounts for directors such that:

Accepted Answer

A) Remuneration should be measured at cost to the entity or related party and includes any money, consideration or employee benefits paid, payable or provided. 
B) Where directly identifiable, the remuneration should be measured at cost; however, where the measurement of considerations or benefit requires an estimation, the amount should be reflected at fair value according to an arm's length transaction for a similar consideration or benefit. 
C) Remuneration amounts should be disclosed at the fair value of the elements of the emoluments package offered, including any benefits or consideration that take the form of access to resources of the entity or its related parties. 
D) Remuneration amounts should be disclosed at the net realisable value of the elements of the emoluments package offered.In the case of benefits or considerations that take the form of access to resources of the entity or its related parties, these should be disclosed at the deprival value to the relevant entity. 
A) Remuneration should be measured at cost to the entity or related party and includes any money, consideration or employee benefits paid, payable or provided. 
B) Where directly identifiable, the remuneration should be measured at cost; however, where the measurement of considerations or benefit requires an estimation, the amount should be reflected at fair value according to an arm's length transaction for a similar consideration or benefit. 
C) Remuneration amounts should be disclosed at the fair value of the elements of the emoluments package offered, including any benefits or consideration that take the form of access to resources of the entity or its related parties. 
D) Remuneration amounts should be disclosed at the net realisable value of the elements of the emoluments package offered.In the case of benefits or considerations that take the form of access to resources of the entity or its related parties, these should be disclosed at the deprival value to the relevant entity.

Question 12

In order for two parties to be related they must be under the common control or influence of a third party.

Accepted Answer

A) True 
 B)False

Question 13

According to IAS 24,disclosures required for transactions with related parties in the wholly owned group include:

Accepted Answer

A) the aggregate amounts receivable from and payable to related parties as at the reporting date classified into current and non-current categories. 
B) aggregate number of shares and options held by the related party as at the reporting date including the class of share, unit, option or other equity instrument. 
C) the nature of terms and conditions of share and option transactions. 
D) the fair value of any equity transaction with any related party as at the reporting date. 
A) the aggregate amounts receivable from and payable to related parties as at the reporting date classified into current and non-current categories. 
B) aggregate number of shares and options held by the related party as at the reporting date including the class of share, unit, option or other equity instrument. 
C) the nature of terms and conditions of share and option transactions. 
D) the fair value of any equity transaction with any related party as at the reporting date.

Question 14

In order for control to exist as the basis for a related-party disclosure the capacity to control must have been demonstrated as having been exercised in the past.

Accepted Answer

A) True 
 B)False

Question 15

Significant influence is defined in IAS 24 as:

Accepted Answer

A) a majority ownership relationship such that the parent entity is able to dominate the decision making of the other entity. 
B) the exercised ability to materially affect the financial and operational decisions of another entity. 
C) the influence that is attached to owning a parcel of shares or other equity instruments of another entity. 
D) the power to participate in the financial and operating policy decisions of an entity, but not the control over those policies. 
A) a majority ownership relationship such that the parent entity is able to dominate the decision making of the other entity. 
B) the exercised ability to materially affect the financial and operational decisions of another entity. 
C) the influence that is attached to owning a parcel of shares or other equity instruments of another entity. 
D) the power to participate in the financial and operating policy decisions of an entity, but not the control over those policies.

Question 16

Directors' income is defined in IAS 24 as including only:

Accepted Answer

A) the regularly paid salary of the directors. 
B) the regularly paid salary, any bonuses paid and retirement benefits. 
C) bonuses, commissions or salaries, retirement benefits and any brokerage or commission made on the subscription or agreement to subscribe to equity instruments in the entity or any of its related parties. 
D) none of the given answers. 
A) the regularly paid salary of the directors. 
B) the regularly paid salary, any bonuses paid and retirement benefits. 
C) bonuses, commissions or salaries, retirement benefits and any brokerage or commission made on the subscription or agreement to subscribe to equity instruments in the entity or any of its related parties. 
D) none of the given answers.

Question 17

The following diagram shows four companies and their associated equity ownership percentages.Which of the companies shown would most likely be considered related entities?

Accepted Answer

A) F and H, G and H, H and I are related parties. 
B) F and G, F and H, G and H, H and I are related parties. 
C) F and G, F and H, G and H, H and I, I and G are related parties. 
D) F and G, F and H, G and H, H and I, I and G, I and F are related parties. 
A) F and H, G and H, H and I are related parties. 
B) F and G, F and H, G and H, H and I are related parties. 
C) F and G, F and H, G and H, H and I, I and G are related parties. 
D) F and G, F and H, G and H, H and I, I and G, I and F are related parties.

Question 18

Tennant Creek Plc has following transactions during the year: $\begin{array}{|l|l|}
\hline \text { II } & \text { Leasing arrangement with an associate } \
\hline \text { III } & \text { Sale of products to a major customer } \
\hline \text { IV } & \text { Transactions in a joint venturer } \
\hline \text { V } & \text { Immaterial loan to key management personnel } \
\hline \text { VI } & \text { Allowance for bad debts from a related party } \
\hline
\end{array}$ Which of the following lists all the related-party transactions that are required to be disclosed in IAS 24 Related Party Disclosures?

Accepted Answer

A) I and III 
B) III and V 
C) II, III and IV 
D) I, IV and V 
A) I and III 
B) III and V 
C) II, III and IV 
D) I, IV and V

Question 19

IAS 24 defines directors as including:

Accepted Answer

A) any employee of the entity whether or not they are validly appointed to occupy the position. 
B) any person that directs an entity in its financial and operating activities regardless of whether they are known by the title of director. 
C) any person in accordance with whose instructions the directors of an entity are accustomed to act. 
D) any person that directs an entity in its financial and operating activities regardless of whether they are known by the title of director and any person in accordance with whose instructions the directors of an entity are accustomed to act. 
A) any employee of the entity whether or not they are validly appointed to occupy the position. 
B) any person that directs an entity in its financial and operating activities regardless of whether they are known by the title of director. 
C) any person in accordance with whose instructions the directors of an entity are accustomed to act. 
D) any person that directs an entity in its financial and operating activities regardless of whether they are known by the title of director and any person in accordance with whose instructions the directors of an entity are accustomed to act.

Question 20

In the following diagram,which entities would be included in a wholly owned group according to the definition in IAS 24?

Accepted Answer

A) F Ltd, G Ltd, H Ltd, I Ltd 
B) F Ltd, G Ltd, K Ltd, H Ltd, I Ltd 
C) G Ltd, K Ltd, H Ltd, I Ltd 
D) G Ltd, K Ltd, H Ltd, I Ltd, J Ltd 
A) F Ltd, G Ltd, H Ltd, I Ltd 
B) F Ltd, G Ltd, K Ltd, H Ltd, I Ltd 
C) G Ltd, K Ltd, H Ltd, I Ltd 
D) G Ltd, K Ltd, H Ltd, I Ltd, J Ltd

Exam 18: Related-Party Disclosures

Which of the following parties is/are covered by the definition of a related party in IAS 24?

Which of the following is typically a related-party transaction within the provisions of IAS 24 Related Party Disclosures?

A close family member of someone who is key management personnel is considered to be a related party.

The most common form of relationship based on significant influence is that between:

The disclosures required by IAS 24 for key management personnel include:

What additional disclosures are required of disclosing entities with regards to related-party transactions?

Which of the following statements is not in accordance with IAS 24 Related Party Disclosures?

Entities that have a controlling entity in common are considered to be 'other related parties'.

The most common example of a relationship reflecting control is that between an investor and its associate company.

Good corporate governance recommends a renumeration report be included in the financial statements.

IAS 24 provides guidance regarding the measurement of remuneration amounts for directors such that:

In order for two parties to be related they must be under the common control or influence of a third party.

According to IAS 24,disclosures required for transactions with related parties in the wholly owned group include:

In order for control to exist as the basis for a related-party disclosure the capacity to control must have been demonstrated as having been exercised in the past.

Significant influence is defined in IAS 24 as:

Directors' income is defined in IAS 24 as including only:

The following diagram shows four companies and their associated equity ownership percentages.Which of the companies shown would most likely be considered related entities?

IAS 24 defines directors as including:

In the following diagram,which entities would be included in a wholly owned group according to the definition in IAS 24?

An Overview of the International External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, Plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

An Overview of Accounting for Liabilities

Accounting for Leases

Share Capital, Reserves and Share Options Employee Bonus Schemes

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Income Taxes

The Statement of Cash Flows

Events Occurring After the Reporting Date

Earnings Per Share

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues III: Accounting for Indirect Ownership Interest

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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