QUESTION IAS 24 Related Party Disclosures

Following transactions were carried out by Yellow Limited during the year ended June 30, 2020.

(i) Mr. Sharp, a well-known management consultant was hired, to conduct a three weeks workshop on time management for the staff of the company at a fee of Rs. 0.5 million. Mr. Sharp is the son of the Chief Executive Officer.

(ii) A loan of Rs. 30 million was obtained from Blue Bank Limited. The loan was negotiated by Mr. Slim, General Manager Finance of Yellow Limited, who was formerly a senior executive of the Bank.

(iii) Three used delivery trucks of the company were sold to Red Supplies Limited, which supplies approximately 60% of the total raw material used by the company.

(iv) Granted interest bearing loan to its Chief Executive Officer for construction of house in accordance with the companys policy relating to employees benefit.

(v) Paid mobilization advance of Rs. 9 million against a construction contract to Orange Limited which is owned by Mr. Clear, a member of a reputed business family. Two influential directors of the company are nephews of Mr. Clear.

(vi) The company awarded a contract for plant maintenance services to its subsidiary Brown (Pvt.) Limited effective August 01, 2021.

(vii) The company has nominated a director in Purple Limited who participates actively in its operational decisions. However, no business relations exist between the two companies.

Required:

For each case, discuss the requirement of IAS 24 (Related Party Disclosures) as regards the following disclosures in the financial statements for the year ended June 30, 2020:

(a) Related party relationship; and

(b) Related party transactions.