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IFRS Essentials by Norbert Lüdenbach, Dieter Christian

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IAS 24 RELATED PARTY DISCLOSURES

1 INTRODUCTION

The purpose of the disclosures required by IAS 24 is to draw attention to the possibility that the entity's financial statements may have been affected by the existence of related parties and by transactions and outstanding balances with such parties. For example, an entity may grant a loan to its associate on favorable terms (IAS 24.1 and 24.5–24.8).

2 RELATED PARTIES AND RELATIONSHIPS WITH THEM

Before defining the concept “related party,” the following terms have to be explained (IAS 24.9):

  • Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity. They include:
    • that person's children and spouse or domestic partner as well as the children of that spouse or domestic partner, and
    • dependants of that person or that person's spouse or domestic partner.
  • The term key management personnel refers to those persons having authority and responsibility for planning, directing, and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity.

A related party is a person or entity that is related to the reporting entity. The reporting entity is the entity that is preparing its financial statements (IAS 24.9).

(a) A person or a close member of that person's family is related to a reporting entity if one of the following criteria is met with regard to that person ...

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