Accountancy for Business

Acceptance of clients Acquiring a practice Recruiting a Manager Money Laundering Accountants fees Companies Act 2006 Late filing penalties Accounting Standards Auditing Standards Accounting Software Corporation Tax Benefits In Kind (P11D) VAT Returns Budget 2008 Gaining CPD
Latest News : Focus on data protection        Stewart Twynham's IT security diary - The tip of the iceberg        Focus on disaster recovery and business continuity planning        Darling to reveal CGT decision 'in three weeks'        CEO's Diary: Going for growth       

FRS 8 Related Party Disclosures


FRS 8 require companies to disclose related party transactions in its notes to the financial statements.

Disclosure should include name of the related party, nature and value of the transactions and the relationship of that related party to the company.

A subsidiary company is exempted from the requirement to disclose related party information in its notes to the financial statements provided the parent company prepares consolidated accounts will disclosure such information.

The subsidiary company should also have a controlling party note in its notes to the financial statements stating the parent company and address of where the consolidated accounts can be obtained.

Why related party transactions are important?

The disclosure of related parties transactions could help the users of the financial statements to understand the performance result of the company or group of companies.

Transactions such as loans from one company to another company within the group. Information such as whether the loan is interest free or interest is chargeable at the market rate, terms and conditions of the loan arrangement should be disclosed and what are the terms and conditions of the loans.

Such information will allow the users of the financial statements to evaluate whether the company will be better off to borrow directly from financial institution or continue with the existing loan arrangement.

Email This Page  Print This Page

Site Search
Things you must know as business owners ! - Take a 6 question quiz and see how you will score
1. What is the corporation tax rate for small companies?