(Adapted from Chow, L., Kan, S., Taylor, D. & Tsui, C. (2006). Advanced Financial Accounting in Hong Kong. Hong Kong: Longman.) Discuss whether the following events would require disclosure in the financial statements of the RP Group, a public limited company, under HKAS 24 ‘Related Party Disclosure’. The RP Group, merchant bankers, has a number of subsidiaries, associates and joint ventures in its group structure. During the financial year to 31 October 20X1,

the following events occurred:

(i) The company agreed to finance a management buyout of a group company, AB, a limited company. In addition to providing loan finance, the company has retained a 25% equity holding in the company and has a main board director on the board of AB. RP received management fees, interest payments and dividends from AB.

(ii) On 1 July 20X1, RP sold a wholly owned subsidiary, X, a limited company, to Z, a public limited company. During the year, RP supplied X with second hand office equipment and X leased its factory from RP. The transactions were all contracted for at market rates.