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L19 Notes_Part_14 - acquisition of materials or merchandise...

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Identifying Related Party Transactions What is a related party transaction? One party has the ability to impose terms which would not otherwise result from an arms length transaction What are examples of related parties? Management and immediate families Principal owners and families Investments accounted for using the equity method Beneficial employee trust funds that are managed by the companies management Any party dealing with the entity that has ownership, control or significant influence or is able to be influenced What are examples of related parties transactions? lease of property acquisition of materials or merchandise or services
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Unformatted text preview: acquisition of materials or merchandise or services company conducts seminar at a facility of related party company contracts with food service of related party. Loans to and from family Related Party Transactions Why do we need to identify related parties? Standards require disclosure What disclosures must be made? • nature of relationship • adequate description of transaction • dollar volume • amounts owed to or due from related party Why are these disclosures necessary? presumption that transaction makes economic sense should not be a assumed agency problems could cause group of...
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