AS 18 - Related party disclosure
This query is : Resolved
30 April 2008
In case of a related party transaction between a company & a partnership firm, is it necessary to disclose the profit earned by the company from the firm in the company's P&L account??
30 April 2008
No, it is not required to disclose profit seperately. I suppose you are referring the case when sales is made by company to the firm. In this case, even no need to disclose seperately amount of sales to firm also. But in Notes to accounts, you have to disclose the sales amount for the year (to firm) and unpaid amount by firm, included in Debtors, as on Balance Sheet date.
30 April 2008
It isn't about the sales, it is about the company's share of profit earned from the partnership firm!!
01 May 2008
Yes. As far as share of profit is concerned, it is to be included under the head "Other Income"
In Notes to Accounts, Details of Related Party Transactions are required to be disclosed as required by AS 18
In Notes to Accounts, Details of Related Party Transactions are required to be disclosed as required by AS 18
01 May 2008
I agree with the treatment suggested by my friend but still want to add some.
AS 18 applies where there are 1) two related parties, and 2) they enter into any trabnsaction, like sale, purchase, loan, etc.
In this case, if company does not enter into any transaction with firm it only needs to disclose name and relation with firm and not the share in annual profits of firm. Even if it enters in any transaction, details of those transactions will need to be disclosed as required by standard.
So, disclosure of profit is not required by AS 18. But you should include the profit in P&L as profit received from partnership firm is exempt in hands of partners as well as it will help you to reconcile acounts of each entity in each other's books.
AS 18 applies where there are 1) two related parties, and 2) they enter into any trabnsaction, like sale, purchase, loan, etc.
In this case, if company does not enter into any transaction with firm it only needs to disclose name and relation with firm and not the share in annual profits of firm. Even if it enters in any transaction, details of those transactions will need to be disclosed as required by standard.
So, disclosure of profit is not required by AS 18. But you should include the profit in P&L as profit received from partnership firm is exempt in hands of partners as well as it will help you to reconcile acounts of each entity in each other's books.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- ITC temporary reversal and reclaim
- Applicable TDS rate for sale of property in Nov 2024
- Inventory of finished goods
- Sale of property furniture sale
- Quiery in relation to GST liability in case of an advocate who has obtained GST registration.
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- Can we claim ITC of Feb-2024 in the month of November-2024 which was not claimed by oversight
- RCM INVOICING FROM NOV-2024
- Confusion around Form 26QB fields
- TDS under section and rate of TDS
- GST input on scooter purchased
- TDS under section 194Q and TCS under section 206C
- GST input on car insurance and repairs
- GST input on Diwali gift to employee
- GST input on Mobile Handset
- Material and freight in same invoice
- TDS under section 194J inclusive of reimbursement of expenses
- TDS on Material and Labour in same invoice
- Should I be worried about and rectify reporting Jan,Feb ,March 2024 foreign salary in schedule FA?
Trending Online Classes
CAclubindia
