3. • X Ltd. sold to Y Ltd. goods having a sales value of
Rs. 25 lakhs on credit basis during the F. Y. 2016-17.
Mr. A the Managing Director and Chief Executive
of X Ltd. owns nearly 100% of the Capital of Y Ltd.
The sales were made to Y Ltd. at nominal selling
price of X Ltd.
4. • Here in this case, Mr. A holds nearly 100% shares of Y ltd.
Which means that Mr. A is owner of Y Ltd.
• Now we can say that X Ltd. is entering into transaction with
Mr. A through its intermediary Y Ltd.
• The above transaction is indirect transection with Mr. A i.e.
Key management personnel (Managing Director and Chief
Executive of Ltd. through intermediary).
• Hence, these transactions should be distinctly disclosed as
per AS – 18.
Applicability Analysis
5. The following Disclosures will be made
• Relationship - Mr. A is Key management personnel of X
Ltd.
• Sale of goods to y Ltd. on credit basis
• Sales of Rs. 25 Lac
• Mr. A (Managing Director and Chief Executive) is owner of
Y Ltd.
• Outstanding amounts with Y Ltd. 25 Lac
7. • P Ltd. purchases fixed assets from R Ltd. on Financial
year 2016-2017 on credit worth Rs. 5 cr. P Ltd. owns
70% of the voting power of Q Ltd. Q Ltd. in turn owns
50% of the voting interest in R Ltd. Further, P Ltd. also
directly owns 15% of the voting interest in R Ltd.
8.
9. • P Ltd. would be considered to control R Ltd.
• The definition of control of AS-18, includes ownership directly or
indirectly, of more than half of the voting power of another
enterprise.
• As P Ltd. is a majority shareholder in Q Ltd., it has control over it.
Further, as P Ltd. and Q Ltd. together are majority shareholders(i.e.
15% + 50%) in R Ltd. P Ltd. has indirect control over it. Accordingly,
P Ltd. has the ability to control R Ltd., indirectly, via the share
ownership in Q Ltd. apart from its individual shareholding in R Ltd.
• Hence, these transactions should be distinctly disclosed as per AS –
18.
• Even if there is no transaction with R Ltd. still disclosures will be
made as P Ltd. is owner of R Ltd.
Applicability Analysis
10. Disclosures
• Relationship - P Ltd. is indirect owner of R Ltd.
• Purchase of fixed assets.
• Sales of Rs. 5 crore.
• P Ltd. is owner of Q Ltd. and Q Ltd. holds 50% holding power
in R ltd.
12. Purchase of goods worth Rs. 9 Lac from B Ltd. (A Ltd. holds
60% shares of B Ltd.).
Purchase of fixed asset to C Ltd. worth Rs. 12 Lac.( B Ltd. holds
90% voting power of C Ltd. ).
Render service to Mr. M worth Rs. 65000 (Mr. pravin is
Managing Director of A Ltd.).
Purchase of land from Mr. Deepak worth Rs. 80Lac (Mr.
Deepak is son of Mr. Pravin).
M Ltd. Holdes 85% shares of A Ltd.
Following information related to A Ltd. is given
13. In case we have so many related parties and
multiple transections we can show mass
disclosure
Discloser will me made as fallows
14. Holding co. M Ltd.
Subsidiary co. B Ltd.
Fellow Subsidiary co. C Ltd.
Key management personnel Mr. Pravin
Relative of Key management
personnel
Mr. Deepak
Name of related parties and relationship
15. Particulars. Subsidiary
co
Fellow
Subsidiary
KPM Relative
of KPM
Total
Purchase of
goods
9 Lac 9 Lac
Sale of fixed 12 Lac 12 Lac
Render service 65000 65000
Purchase of land 80 Lac 80 Lac
Aggregate information on transaction with related parties