![]() * ‘the Turnover with respect to the above transactions shall be computed on the basis of audited financial statements of the proceeding financial year’ (g) underwriting the subscription of any securities or derivatives thereof, of the company: (SR if – Remuneration if exceeds 1% of the net worth) (f) such related party’s appointment to any office or place of profit in the company, its subsidiary company or associate company and (SR – exceeding 2.5 Lacs rupees per month) (e) appointment of any agent for purchase or sale of goods, materials, services or property (d) availing or rendering of any services directly or through appointment of agent (SR if – amount exceeds 10% or more of the turnover of the Company) ![]() (c) leasing of property of any kind (SR if – amount exceeds 10% or more of the turnover of the Company) (b) selling or otherwise disposing of, or buying, property of any kind directly or through an agent ( SR if – amount exceeds 10% of more of the Net Worth of the Company) ![]() (a) sale, purchase or supply of any goods or materials directly or through its agent ( SR if -amounts to 10 % or more of the Turnover of the Company) If NRV is exceeded after deferring the losses in the consolidating entries, the losses that would otherwise be deferred in consolidation should be reduced, and a corresponding adjustment made to the related tax effect, to reflect the NRV test determined at the consolidated level.The Related Party Transaction is explained below purely on the basis of Companies Act, 2013, the Accounting Standards, Listing regulations are not considered while drafting this Article.Īs per Section 2(76) of the Companies Act, 2013 “related party”, with reference to a company, means-īut as per the MCA circular dated aforesaid sub-clause (viii) is not applicable to the private companies.Īs per Section 188 of the Companies Act, 2013 its states that, before entering into any kind of Related Party Transaction as described below, consent of the Board is required i.e a Board Resolution is required to be passed, Also, as per Rule 15 of the Companies (Meetings of Board and its Power) if the transaction value exceeds a particular limit, then a Shareholders Resolution (SR) is to be passed( the limit shall be taken individually or for any previous transaction undertaken during the financial year), NRV must cover both the carrying amount reflected in the inventories as recorded in the books of the company holding the inventories, the related tax effects on the intercompany transactions (see TX 2.4.4), and the losses deferred (added to carrying amount) by consolidating entries. When accounting for intercompany inventory sales at a loss, a similar procedure as described in CG 8.2.4 should be followed, but special care must be exercised in making a lower of cost or net realizable value test of the inventories of the purchasing company. The resulting effect of that elimination on the net income or expense of the VIE shall be attributed to the primary beneficiary (and not to noncontrolling interests) in the consolidated financial statements.īoth ASC 810-10-45-1 and ASC 323-10-35-7 provide for elimination of intercompany losses (by increasing the carrying amount of the related assets) in a manner consistent with intercompany income. Fees or other sources of income or expense between a primary beneficiary and a consolidated VIE shall be eliminated against the related expense or income of the VIE. The consolidated entity shall follow the requirements for elimination of intra-entity balances and transactions and other matters described in Section 810-10-45 and paragraphs 810-10-50-1 through 50-1B and existing practices for consolidated subsidiaries. Any specialized accounting requirements applicable to the type of business in which the VIE operates shall be applied as they would be applied to a consolidated subsidiary. After the initial measurement, the assets, liabilities, and noncontrolling interests of a consolidated VIE shall be accounted for in consolidated financial statements as if the VIE were consolidated based on voting interests. The principles of consolidated financial statements in this Topic apply to primary beneficiaries' accounting for consolidated variable interest entities (VIEs). Transfers and servicing of financial assets Revenue from contracts with customers (ASC 606) Loans and investments (post ASU 2016-13 and ASC 326) Investments in debt and equity securities (pre ASU 2016-13) Insurance contracts for insurance entities (pre ASU 2018-12) Insurance contracts for insurance entities (post ASU 2018-12) IFRS and US GAAP: Similarities and differences ![]() Business combinations and noncontrolling interestsĮquity method investments and joint ventures
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