Hi everyone!
We shall study IAS 24 today!
Let's consider these scenarios.
A) Steve buys raw materials at 0.50k/item from the producer
B) Rose buys the same raw materials at 0.25k/item because the producer is her mother.
After production, its obvious that Rose would have a reduced cost of sale and higher profit than Steve and it won't be fair to compare their results.
Rose's transaction is a related party transaction while that of Steve is an arms length transaction.
We shall study IAS 24 today!
Let's consider these scenarios.
A) Steve buys raw materials at 0.50k/item from the producer
B) Rose buys the same raw materials at 0.25k/item because the producer is her mother.
After production, its obvious that Rose would have a reduced cost of sale and higher profit than Steve and it won't be fair to compare their results.
Rose's transaction is a related party transaction while that of Steve is an arms length transaction.
