The following examples accompany, but are not part of, IAS 24 Related Party Disclosures. They illustrate:
the partial exemption for government‑related entities; and
how the definition of a related party would apply in specified circumstances.
In the examples, references to ‘financial statements’ relate to the individual, separate or consolidated financial statements.
IE1 | Government G directly or indirectly controls Entities 1 and 2 and Entities A, B, C and D. Person X is a member of the key management personnel of Entity 1. |
IE2 | For Entity A’s financial statements, the exemption in paragraph 25 applies to:
However, that exemption does not apply to transactions with Person X. |
IE3 | In Entity A’s financial statements, an example of disclosure to comply with paragraph 26(b)(i) for individually significant transactions could be: |
On 15 January 20X1 Entity A, a utility company in which Government G indirectly owns 75 per cent of outstanding shares, sold a 10 hectare piece of land to another government‑related utility company for CU5 million.1 On 31 December 20X0 a plot of land in a similar location, of a similar size and with similar characteristics, was sold for CU3 million. There had not been any appreciation or depreciation of the land in the intervening period. See note X [of the financial statements] for disclosure of government assistance as required by IAS 20 Accounting for Government Grants and Disclosure of Government Assistance and notes Y and Z [of the financial statements] for compliance with other relevant IFRSs.
In the year ended December 20X1 Government G provided Entity A, a utility company in which Government G indirectly owns 75 per cent of outstanding shares, with a loan equivalent to 50 per cent of its funding requirement, repayable in quarterly instalments over the next five years. Interest is charged on the loan at a rate of 3 per cent, which is comparable to that charged on Entity A’s bank loans.2 See notes Y and Z [of the financial statements] for compliance with other relevant IFRSs.
In Entity A’s financial statements, an example of disclosure to comply with paragraph 26(b)(ii) for collectively significant transactions could be:
Government G, indirectly, owns 75 per cent of Entity A’s outstanding shares. Entity A’s significant transactions with Government G and other entities controlled, jointly controlled or significantly influenced by Government G are [a large portion of its sales of goods and purchases of raw materials] or [about 50 per cent of its sales of goods and about 35 per cent of its purchases of raw materials].
The company also benefits from guarantees by Government G of the company’s bank borrowing. See note X [of the financial statements] for disclosure of government assistance as required by IAS 20 Accounting for Government Grants and Disclosure of Government Assistance and notes Y and Z [of the financial statements] for compliance with other relevant IFRSs.
The references are to subparagraphs of the definition of a related party in paragraph 9 of IAS 24.
IE4 | Parent entity has a controlling interest in Subsidiaries A, B and C and has significant influence over Associates 1 and 2. Subsidiary C has significant influence over Associate 3. |
IE5 | For Parent’s separate financial statements, Subsidiaries A, B and C and Associates 1, 2 and 3 are related parties. [Paragraph 9(b)(i) and (ii)] |
IE6 | For Subsidiary A’s financial statements, Parent, Subsidiaries B and C and Associates 1, 2 and 3 are related parties. For Subsidiary B’s separate financial statements, Parent, Subsidiaries A and C and Associates 1, 2 and 3 are related parties. For Subsidiary C’s financial statements, Parent, Subsidiaries A and B and Associates 1, 2 and 3 are related parties. [Paragraph 9(b)(i) and (ii)] |
IE7 | For the financial statements of Associates 1, 2 and 3, Parent and Subsidiaries A, B and C are related parties. Associates 1, 2 and 3 are not related to each other. [Paragraph 9(b)(ii)] |
IE8 | For Parent’s consolidated financial statements, Associates 1, 2 and 3 are related to the Group. [Paragraph 9(b)(ii)] |
IE9 | A person, X, has a 100 per cent investment in Entity A and is a member of the key management personnel of Entity C. Entity B has a 100 per cent investment in Entity C. |
IE10 | For Entity C’s financial statements, Entity A is related to Entity C because X controls Entity A and is a member of the key management personnel of Entity C. [Paragraph 9(b)(vi)–(a)(iii)] |
IE11 | For Entity C’s financial statements, Entity A is also related to Entity C if X is a member of the key management personnel of Entity B and not of Entity C. [Paragraph 9(b)(vi)–(a)(iii)] |
IE12 | Furthermore, the outcome described in paragraphs IE10 and IE11 will be the same if X has joint control over Entity A. [Paragraph 9(b)(vi)–(a)(iii)] (If X had only significant influence over Entity A and not control or joint control, then Entities A and C would not be related to each other.) |
IE13 | For Entity A’s financial statements, Entity C is related to Entity A because X controls A and is a member of Entity C’s key management personnel. [Paragraph 9(b)(vii)–(a)(i)] |
IE14 | Furthermore, the outcome described in paragraph IE13 will be the same if X has joint control over Entity A. The outcome will also be the same if X is a member of key management personnel of Entity B and not of Entity C. [Paragraph 9(b)(vii)–(a)(i)] |
IE15 | For Entity B’s consolidated financial statements, Entity A is a related party of the Group if X is a member of key management personnel of the Group. [Paragraph 9(b)(vi)–(a)(iii)] |
IE16 | A person, X, has an investment in Entity A and Entity B. |
IE17 | For Entity A’s financial statements, if X controls or jointly controls Entity A, Entity B is related to Entity A when X has control, joint control or significant influence over Entity B. [Paragraph 9(b)(vi)–(a)(i) and 9(b)(vii)–(a)(i)] |
IE18 | For Entity B’s financial statements, if X controls or jointly controls Entity A, Entity A is related to Entity B when X has control, joint control or significant influence over Entity B. [Paragraph 9(b)(vi)–(a)(i) and 9(b)(vi)–(a)(ii)] |
IE19 | If X has significant influence over both Entity A and Entity B, Entities A and B are not related to each other. |
IE20 | A person, X, is the domestic partner of Y. X has an investment in Entity A and Y has an investment in Entity B. |
IE21 | For Entity A’s financial statements, if X controls or jointly controls Entity A, Entity B is related to Entity A when Y has control, joint control or significant influence over Entity B. [Paragraph 9(b)(vi)–(a)(i) and 9(b)(vii)–(a)(i)] |
IE22 | For Entity B’s financial statements, if X controls or jointly controls Entity A, Entity A is related to Entity B when Y has control, joint control or significant influence over Entity B. [Paragraph 9(b)(vi)–(a)(i) and 9(b)(vi)–(a)(ii)] |
IE23 | If X has significant influence over Entity A and Y has significant influence over Entity B, Entities A and B are not related to each other. |
IE24 | Entity A has both (i) joint control over Entity B and (ii) joint control or significant influence over Entity C. |
IE25 | For Entity B’s financial statements, Entity C is related to Entity B. [Paragraph 9(b)(iii) and (iv)] |
IE26 | Similarly, for Entity C’s financial statements, Entity B is related to Entity C. [Paragraph 9(b)(iii) and (iv)] |