Example - Understanding Related Party Disclosures – FAQ | IFRS

Example – Understanding related party disclosures

Here is a disclosure from Petrobas in Brasil:

Exemption from disclosure (IAS 24 25)

Government G directly or indirectly controls Entities 1 and 2 and Entities A, B, C and D. Person X is a member of the key management personnel of Entity 1.

Example - Understanding related party disclosures Example - Understanding related party disclosures Example - Understanding related party disclosures

For Entity A’s financial statements, the exemption in IAS 24 25 applies to:

  1. transactions with Government G; and Example – Understanding related party disclosures
  2. transactions with Entities 1 and 2 and Entities B, C and D. Example – Understanding related party disclosures

However, that exemption does not apply to transactions with Person X. Example – Understanding related party disclosures

Disclosure requirements when an exemption applies Example – Understanding related party disclosures

In Entity A’s financial statements, an example of disclosure to comply with IAS 24 26(b)(i) for individually significant transactions could be:

Example of disclosure for the individually significant transaction carried out on non-market terms

On 15 January 20X1 Entity A, a utility company in which Government G indirectly owns 75 percent of outstanding shares, sold a 10-hectare piece of land to another government-related utility company for CU5 million1. On 31 December 20X0 a plot of land in a similar location, of a similar size and with similar characteristics, was sold for CU3 million. There had not been any appreciation or depreciation of the land in the intervening period. See note X [of the financial statements] for disclosure of government assistance as required by IAS 12 Accounting for Government Grants and Disclosure of Government Assistance and notes Y and Z [of the financial statements] for compliance with other relevant IFRSs.

Example of disclosure for the individually significant transaction because of the size of the transaction

In the year ended December 20X1 Government G provided Entity A, a utility company in which Government G indirectly owns 75 percent of outstanding shares, with a loan equivalent to 50 per cent of its funding requirement, repayable in quarterly installments over the next five years. Interest is charged on the loan at a rate of 3 percent, which is comparable to that charged on Entity A’s bank loans2. See notes Y and Z [of the financial statements] for compliance with other relevant IFRSs.

Example of disclosure of collectively significant transactions

In Entity A’s financial statements, an example of disclosure to comply with IAS 24 26(b)(ii) for collectively significant transactions could be:

Government G, indirectly, owns 75 percent of Entity A’s outstanding shares. Entity A’s significant transactions with Government G and other entities controlled, jointly controlled or significantly influenced by Government G are [a large portion of its sales of goods and purchases of raw materials] or [about 50 per cent of its sales of goods and about 35 per cent of its purchases of raw materials].

The company also benefits from guarantees by Government G of the company’s bank borrowing. See note X [of the financial statements] for disclosure of government assistance as required by IAS 20 Accounting for Government Grants and Disclosure of Government Assistance and notes Y and Z [of the financial statements] for compliance with other relevant IFRSs.

Example – Understanding related party disclosures

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