Homework answers / question archive / Rizal Technological University CBET 01-502A Chapter 4 1)A party is related to an entity if the party, directly or indirectly, through one or more intermediaries   Controls, is controlled by or is under common control with the entity Has an interest in the entity that gives it significant influence over the entity Has joint control over the entity All of these define a related party   Related parties include all of the following, except   Parent, subsidiary and fellow subsidiaries Associate Key management personnel and close family members Two venturers simply because they share joint control   A related party transaction is a transfer of resources or obligations   Between related parties when a price is charged Between related parties, regardless of whether a price is charged Between unrelated parties when a price is charged Between unrelated parties, regardless of whether a price is charged   Unrelated parties include which of the following?   Providers of finance in the course of their normal dealings with an entity by virtue only of these dealings Government agencies Single customer with whom an entity transacts a significant volume of business merely by virtue of the resulting economic dependence All of these are unrelated parties   This is pricing policy between related parties which sets the price by reference to comparable goods sold in an economically comparable market to a buyer unrelated to the seller   No price method Cost plus method Resale price method Uncontrolled price method   Close family members if of an individual include all of the following, except   the individual’s spouse and children children of the individual’s spouse dependents of the individual or individual’s spouse brothers and sisters of the individual   the minimum disclosures about related party transactions include all of the following, except   the amount of the transaction amount of outstanding balance allowance for doubtful accounts related to the outstanding balance nature of the relationship   an entity that entered into certain related party transactions would be required to disclose all of the following information, except   nature of the relationship between the parties to the transactions nature of any future transactions planned between the parties and the terms involved   peso amount of the transactions amount due from or to related parties at the end of reporting period   which would not be considered key management personnel compensation?   Short-term benefits Share-based payments Termination benefits Reimbursement of out-of-pocket expenses   Which of the following is not a mandated disclosure about related party transactions?   Relationship between parent and subsidiaries irrespective of whether there have been transactions between the related parties Names of all the associates that an entity has dealt with during the year Name of the entity’s parent and, if different, the ultimate controlling party If neither the entity’s parent nor the ultimate controlling entity produces financial statements available for public use, then the name of the next most senior parent that does so   Which of the following is not a required minimum disclosure about related party transaction?   The amount of related party transaction The amount of the outstanding balance The amount of similar transaction with unrelated parties to establish that comparable related party transaction has been entered at arm’s strength Doubtful debt related to the outstanding balance   Which of the following is not required as a separate related party disclosure?   The son of the chief executive officer of the entity The parent of the entity An entity that has a common director with the entity Joint venture in which the entity is a venturer   All of the following are related parties, except   Joint venture in which the entity is a venturer A postemployment benefit plan for the employees An executive director of the entity The partner of a key manager is a major supplier of the entity   Which of the following should be included in key management personnel compensation?   Social security contributions Postemployment benefits Social security contribution and postemployment benefits Social security contributions, postemployment benefits and dividends to shareholders Which of the following is not a related party of an entity?   A shareholder of the entity owning twenty percent An entity providing banking facilities to the entity An associate of the entity Key management personnel of the entity   All of the following are related party transactions, except   Transferred goods from inventory to a subsidiary Sold an entity car to the wife of the managing director Sold an asset to an associate Took out a huge bank loan   Disclosures of related party transactions include all, except   Nonmonetary exchange by affiliates Sales of inventory by a subsidiary to the parent Expense allowances for executives which exceed normal business practice An entity’s agreement to act as surety for a loan to the chief executive officer   Related party transactions include all of the following, except   A venturer sold goods to the joint venture Sold a car to the uncle of the entity’s finance director Sold goods to another entity owned by the daughter of the entity’s managing director All of these are related party transactions   Which of the following most likely would be a related party transaction requiring disclosure?   The entity borrowed P1,000,000 from the southwest bank issuing a noninterest-bearing note The entity borrowed P500,000 from Eastwest bank with no scheduled term for how or when fund will be prepaid The entity borrowed P2,000,000 from northwest bank at a rate significantly above the prevailing market rate All of these are related party transactions   A parent entity has a wholly-owned subsidiary

Rizal Technological University CBET 01-502A Chapter 4 1)A party is related to an entity if the party, directly or indirectly, through one or more intermediaries   Controls, is controlled by or is under common control with the entity Has an interest in the entity that gives it significant influence over the entity Has joint control over the entity All of these define a related party   Related parties include all of the following, except   Parent, subsidiary and fellow subsidiaries Associate Key management personnel and close family members Two venturers simply because they share joint control   A related party transaction is a transfer of resources or obligations   Between related parties when a price is charged Between related parties, regardless of whether a price is charged Between unrelated parties when a price is charged Between unrelated parties, regardless of whether a price is charged   Unrelated parties include which of the following?   Providers of finance in the course of their normal dealings with an entity by virtue only of these dealings Government agencies Single customer with whom an entity transacts a significant volume of business merely by virtue of the resulting economic dependence All of these are unrelated parties   This is pricing policy between related parties which sets the price by reference to comparable goods sold in an economically comparable market to a buyer unrelated to the seller   No price method Cost plus method Resale price method Uncontrolled price method   Close family members if of an individual include all of the following, except   the individual’s spouse and children children of the individual’s spouse dependents of the individual or individual’s spouse brothers and sisters of the individual   the minimum disclosures about related party transactions include all of the following, except   the amount of the transaction amount of outstanding balance allowance for doubtful accounts related to the outstanding balance nature of the relationship   an entity that entered into certain related party transactions would be required to disclose all of the following information, except   nature of the relationship between the parties to the transactions nature of any future transactions planned between the parties and the terms involved   peso amount of the transactions amount due from or to related parties at the end of reporting period   which would not be considered key management personnel compensation?   Short-term benefits Share-based payments Termination benefits Reimbursement of out-of-pocket expenses   Which of the following is not a mandated disclosure about related party transactions?   Relationship between parent and subsidiaries irrespective of whether there have been transactions between the related parties Names of all the associates that an entity has dealt with during the year Name of the entity’s parent and, if different, the ultimate controlling party If neither the entity’s parent nor the ultimate controlling entity produces financial statements available for public use, then the name of the next most senior parent that does so   Which of the following is not a required minimum disclosure about related party transaction?   The amount of related party transaction The amount of the outstanding balance The amount of similar transaction with unrelated parties to establish that comparable related party transaction has been entered at arm’s strength Doubtful debt related to the outstanding balance   Which of the following is not required as a separate related party disclosure?   The son of the chief executive officer of the entity The parent of the entity An entity that has a common director with the entity Joint venture in which the entity is a venturer   All of the following are related parties, except   Joint venture in which the entity is a venturer A postemployment benefit plan for the employees An executive director of the entity The partner of a key manager is a major supplier of the entity   Which of the following should be included in key management personnel compensation?   Social security contributions Postemployment benefits Social security contribution and postemployment benefits Social security contributions, postemployment benefits and dividends to shareholders Which of the following is not a related party of an entity?   A shareholder of the entity owning twenty percent An entity providing banking facilities to the entity An associate of the entity Key management personnel of the entity   All of the following are related party transactions, except   Transferred goods from inventory to a subsidiary Sold an entity car to the wife of the managing director Sold an asset to an associate Took out a huge bank loan   Disclosures of related party transactions include all, except   Nonmonetary exchange by affiliates Sales of inventory by a subsidiary to the parent Expense allowances for executives which exceed normal business practice An entity’s agreement to act as surety for a loan to the chief executive officer   Related party transactions include all of the following, except   A venturer sold goods to the joint venture Sold a car to the uncle of the entity’s finance director Sold goods to another entity owned by the daughter of the entity’s managing director All of these are related party transactions   Which of the following most likely would be a related party transaction requiring disclosure?   The entity borrowed P1,000,000 from the southwest bank issuing a noninterest-bearing note The entity borrowed P500,000 from Eastwest bank with no scheduled term for how or when fund will be prepaid The entity borrowed P2,000,000 from northwest bank at a rate significantly above the prevailing market rate All of these are related party transactions   A parent entity has a wholly-owned subsidiary

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16. All of the following are related party transactions, except

1. 1. Transferred goods from inventory to a subsidiary
   2. Sold an entity car to the wife of the managing director
   3. Sold an asset to an associate
   4. Took out a huge bank loan

17. Disclosures of related party transactions include all, except

1. 1. Nonmonetary exchange by affiliates
   2. Sales of inventory by a subsidiary to the parent
   3. Expense allowances for executives which exceed normal business practice
   4. An entity’s agreement to act as surety for a loan to the chief executive officer

18. Related party transactions include all of the following, except

1. 1. A venturer sold goods to the joint venture
   2. Sold a car to the uncle of the entity’s finance director
   3. Sold goods to another entity owned by the daughter of the entity’s managing director
   4. All of these are related party transactions

19. Which of the following most likely would be a related party transaction requiring disclosure?

1. 1. The entity borrowed P1,000,000 from the southwest bank issuing a noninterest-bearing note
   2. The entity borrowed P500,000 from Eastwest bank with no scheduled term for how or when fund will be prepaid
   3. The entity borrowed P2,000,000 from northwest bank at a rate significantly above the prevailing market rate
   4. All of these are related party transactions

20. A parent entity has a wholly-owned subsidiary. During the current year, the parent sold goods to the subsidiary. The subsidiary paid a party 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 balances and therefore it has been provide as uncollectible. Administration cost are incurred as a result of the current credit controllers chasing the debt. All of the following are required to be disclosed in relation to this arrangement, except

1. 1. The administration cost of the credit control department incurred in chasing the debt
   2. Details of any guarantee received in relation to the outstanding balance
   3. The provision in relation to the debt being uncollectible
   4. The amount of the transaction and outstanding balance