MGT401 Financial Accounting II GDB Spring 2021 Solution / Discussion Last Date: 04-06-2021
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MGT401 (Financial Accounting – II)-GDB SOLUTION SPRING 2021//VU GDB SOLUTIONS
MGT401 GDB 1 Solution Spring 2021
A related party is a person or entity that is related to the entity that is preparing its financial statements.
Mr. Shan, 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 Shan is the son of the Chief Executive Officer.
Yes, According to IAS 24 (International Accounting Standard) Mr Shan is related party as he is son (close family member) of CEO (member of key management personal) of the company.
The fee for training Rs. 0.5 million paid to to Mr. Sharp shall be disclosed along with nature of related party relationship.
A loan of Rs. 30 million was obtained from Bank Al-Blue Limited. The loan was negotiated by Mr. Saleem, General Manager Finance of Marhaba Limited, who was formerly a senior executive of the Bank.
Blue Bank Limited is not a related party as former employee does not create any such relation. No disclosure is required under IAS 24.
Three used delivery trucks of the company were sold to Brilliant supplies Limited, which supplies approximately 55% of the total row material used by the company.
According to IAS 24 Red Supplies Limited is not a related party as significant volume of business does not create related party relationship unless significant influence can be exerted. No disclosure is required under IAS 24.
Granted interest bearing loan to Chief Executive officer for construction of house in accordance with the company’s policy relating to employees benefit.
According to IAS 24 CEO is related party being member of key management personal. The amount of loan granted along with terms and conditions including rate of interest and outstanding balance shall be disclosed.