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FRS 124

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

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  1. FRS 124 RELATED PARTY DISCLOSURES

  2. 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

  3. 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

  4. Key Mgt Personnel • Having Authority & Responsibility for: (i) Plang (ii) Directg (iii) Ctrllg Of the entity’s activities, and include directors of entity

  5. Close Member of Family • His/her spouse • Parent • Child (including adopted and step) • Brother, sister • Spouse of his/her child, brother/sister

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

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