In business related party transactions are fairly common.$$ Examples where related party transactions occur include:

A parent entity and its subsidiaries

Subsidiaries of a common parents

$$An entity and its principal owners, management, or members of their immediate families

$$Affiliates

and examples of different types of related party tranactions include:

Sales or purchase of property

Accounting, management, or similar services rendered

Lease of property or equipment

Borrowing relationships, including guarantees

Filing of consolidated tax returns

There are rules for financial accounting as well as tax accounting for related party transactions.$$ Why are these rules important?