Yakub02
Banned
1 Impact on the financial statements
A user of financial statements will normally expect the financial statements to reflect transactions that have taken place on normal commercial terms (‘at arm’s length’).
The user of the financial statements would want to be informed if Transactions have taken place that were not at ‘arm’s length’; or There are parties that could enforce transactions on the entity that are not on an ‘arm’s length’ basis.
For example, in a group of companies, an entity might sell goods to its parent or fellow-subsidiaries on more favorable terms than it would sell to other customers. In this situation, the financial performance or financial position reported by the financial statements would be misleading.
In each situation there is a special relationship between the parties to the business transactions.
This is referred to as a ‘related party relationship’.
The objective of IAS24 The objective of IAS 24 is to ensure that an entity’s financial statements contain sufficient disclosures to draw attention to the possibility that the entity’s financial position, or profit or loss may have been affected by: the existence of related parties; and transactions and outstanding balances with related parties. IAS 24 is a disclosure standard. It does not require the redrafting of financial statement
A user of financial statements will normally expect the financial statements to reflect transactions that have taken place on normal commercial terms (‘at arm’s length’).
The user of the financial statements would want to be informed if Transactions have taken place that were not at ‘arm’s length’; or There are parties that could enforce transactions on the entity that are not on an ‘arm’s length’ basis.
For example, in a group of companies, an entity might sell goods to its parent or fellow-subsidiaries on more favorable terms than it would sell to other customers. In this situation, the financial performance or financial position reported by the financial statements would be misleading.
In each situation there is a special relationship between the parties to the business transactions.
This is referred to as a ‘related party relationship’.
The objective of IAS24 The objective of IAS 24 is to ensure that an entity’s financial statements contain sufficient disclosures to draw attention to the possibility that the entity’s financial position, or profit or loss may have been affected by: the existence of related parties; and transactions and outstanding balances with related parties. IAS 24 is a disclosure standard. It does not require the redrafting of financial statement