Beruflich Dokumente
Kultur Dokumente
RELATED PARTIES
Definition
RELATED PARTY is a person or entity na related sa entity na nagpe-prepare ng
kanilang financial statements.
Ang isang party ay considered as related party if that party has:
a. Ay may kakayahan na kontrolin ang other party. He owns more than half ng
voting power ng isang entity.
b. Has significant influence over the reporting entity. He has the power ng mag-
participate sa decision ng entity when it comes to financial and operating policy
but of course wala silang power na mag-control ng policies.
Kapag may significant influence ang isang entity in the other it means pwede
silang mag-represent sa board of directors, mag-participate sa policy making
process ng entity, dependence sa technical information, etc.
If a person or an entity owns 20% or more (20%-50%) share they have a
significant influence over that entity.
c. May joint control over the entity. They contractually agreed na magse-share sila
sa control in an economic activity.
Disclosures that related party transactions were made on terms equivalent to those that
prevail in arms length transactions are made only if such terms can be substantiated.
1. Two entities simply because they have a director or key management personnel
in common.
2. Providers of finance, trade unions, public utilities, and government agencies in
the course of their normal dealings with an entity by virtue only of those dealings.
3. A single customer, supplier, franchisor or general agent with whom with an entity
transacts a significant volume of business merely by virtue of the resulting
economic dependence.
4. Two venturers simply because they share joint control over a joint venture.
(a) a government that has control, joint control or significant influence over the
reporting entity
(b) another entity that is a related party because the same government has
control, joint control or significant influence over both the reporting entity and the
other entity.
If a reporting entity applies the exemption in paragraph 25, it shall disclose the
following about the transactions and related outstanding balances referred to in
paragraph 25:
Pricing policies
Ang accounting recognition ng pag-transfer ng resources ay normally based sa price
agreement ng parties. Sa unrelated parties naman, the price is an arms length price.