Chapter 4 11.

Which of the following is not a related

party?
1. A party is related to an entity f the party
A: A shareholder of the entity that holds one
directly or indirectly through one or more
percent stake in the entity.
intermediaries
12. Which of the following would not be
A: All of these
considered “compensation” in relation to
2. Related parties include all of the following
disclosure of key management personnel
except
compensation?
A: Two venturers simply because they share
A: Reimbursement of out-of-pocket
joint control over a joint venture.
expenses
3. A related party transaction in a transfer of
13. Which of the following is not a mandated
resources or obligations
disclosure about related party transactions?
A: Between related parties, regardless of
A:Names of all of the associates that an
whether a price is charged.
entity has dealt with during the year
4. What is control of one party by another
14. Which of the following is not a required
party?
minimum disclosure about related party
A: The power to govern the financial and
transaction?
operating policies of an entity so as to
A: The amount of similar transaction with
obtain benefits.
unrelated parties to establish that
5. Unrelated parties include all of the
comparable related party transaction has
following except
been entered at arm’s length
A: Postemployment benefit plan for the
15. Which of the following is not required as a
benefit of the employees of the entity.
separate related party disclosure?
6. This is a pricing policy between related
A: Joint venture in which the entity is a
parties which sets the price by reference to
venturer
comparable goods sold in an economically
16. All of the following fall within the definition
comparable market to a buyer unrelated to
of a entity’s related party except
the seller
A: The partner of a key manager is a major
A: Uncontrolled price method
supplier of the entity
7. Close family members of an individual
17. Which of the following should be included
include all of the following except?
in key management personnel
A: Brothers and sisters of the individual.
compensation?
8. If there have been transactions between
A: Social security contributions and
related parties an entity shall disclose
postemployment benefits
A: Nature of the relationship and
18. An entity has a subsidiary and is a venture
information about the transaction and
in a joint venture. During the financial year-
outstanding balance
end, the entity sold goods to both
9. The minimum disclosure about related
subsidiary and joint venture. Consolidated
party transactions include all of the
financial statements are prepared
following except
combining the financial statements of the
A: Nature of the relationship.
entity and the subsidiary. In the separate
10. An entity that entered into certain related
financial statements of the entity for the
party transactions would be required to
current year, disclosure is required for
disclose all of the following information
transactions with
except
A: Both subsidiary and joint venture
A: Nature of any future transactions
19. An entity completed the following
planned between the parties and the terms
transactions in the current year
involved
I. Sold a car to the uncle of the entity’s
finance director.
II. Sold goods to another entity owned by 25. Disclosures of related party transactions
the daughter of the entity’s managing include all of the following except
director A: Sales of inventory by a subsidiary to the
A: II only parent.
20. An entity has entered into a joint venture
with an affiliate to secure access to
additional inventory. Under the joint
venture agreement, the entity will purchase
the output of venture at prices negotiated
on an arm’s length basis. Which of the
following must be disclosed about the
related party transaction?
I. The amount due t the venture at the
end of the reporting period
II. The peso amount of the purchases
during the year
A: Both I & II
21. A parent entity has a wholly-owned
subsidiary. During the current year, the
parent sold goods to the subsidiary. The
subsidiary paid a part of the debt before the
year-end and then encountered financial
difficulties. The subsidiary is not expected
to be able to pay the remainder of the
balance and therefore it has been provided
as uncollectible. Administration costs are
incurred as a result of the parent credit
controllers chasing the debt. All of the
following are required t be disclosed in
relation to this arrangement except
A: The administration costs of the credit
control department incurred in chasing the
debt.
22. All of the following are related party
transactions except
A: Took out a huge bank loan
23. Which of the following is not a related party
of an entity?
A: An entity providing banking facilities to
the entity

24. Which of the following most likely would be

a related party transaction requiring
disclosure?
A: The entity borrowed P500000 from
Eastwest bank with no scheduled terms for
how or when funds will be repaid.