(a) Explain the purpose of FRS 8, Related party disclosures, its relevance to users of published financial information and the main differences to international accounting standards. (6 marks)

(b) The directors of Sidlaw Ltd have requested your advice on the appropriate accounting disclosures for the following:

(1) On 1 February 2001, Sidlaw Ltd purchased 75% of the ordinary share capital of Errol Ltd. Sidlaw Ltd sells £250000 worth of goods to Errol Ltd every month and has done so for many years.

(2) Sidlaw Ltd has a self-managed pension fund for its employees and pays £4 million per annum into the fund. Sidlaw Ltd’s directors also act as fund managers for which Sidlaw Ltd makes no charge to the pension fund.

(3) Mr Muir owns and controls Sidlaw Ltd and Kirric Ltd and has influence, but not control, over Glamis Ltd. All three companies buy and sell goods to each other but are not part of the same group.

Requirement Advise the directors of Sidlaw Ltd on the appropriate accounting disclosures required under FRS 8, Related party disclosures, for all affected companies, providing brief reasons for your recommendations. (7 marks)