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February 2023

Identification of Related Party Relationships

By Dolphy D’souza, Chartered Accountant
Reading Time 5 mins
This article evaluates whether (a) subsidiary of an associate is related to the investor and (b) associate of an associate is related to the investor under Ind AS 24 Related Party Disclosures. QUERY
Following are the definitions of terms such as associate, significant influence, control and subsidiary under the respective standards.
 
Ind AS 28 Investments in Associates and Joint Ventures Paragraph 3An associate is an entity over which the investor has a significant influence.Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies.
Ind AS 110 Consolidated Financial Statements Appendix A – Defined termsControl of an investee - An investor controls an investee when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.Subsidiary - An entity that is controlled by another entity.In the table below, there are two examples:1. Investor X has an Associate Y, which has a Subsidiary Z2. Investor P has an Associate Q, which has an Associate R
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