Chapter 4

1. A party is related to an entity f the

party directly or indirectly through
one or more intermediaries
A: All of these
2. Related parties include all of the
following except
A: Two venturers simply because
they share joint control over a joint
venture.
3. A related party transaction in a
transfer of resources or obligations
A: Between related parties,
regardless of whether a price is
charged.
4. What is control of one party by
another party?
A: The power to govern the
financial and operating policies of
an entity so as to obtain benefits.
5. Unrelated parties include all of the
following except
A: Postemployment benefit plan for
the benefit of the employees of the
entity.
6. This is a 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
A: Uncontrolled price method
7. Close family members of an
individual include all of the
following except?
A: Brothers and sisters of the
individual.
8. If there have been transactions
between related parties an entity
shall disclose
A: Nature of the relationship and
information about the transaction
and outstanding balance
9. The minimum disclosure about
related party transactions include
all of the following except
A: Nature of the relationship.
10. An entity that entered into certain
related party transactions would be
required to disclose all of the
following information except

A: Nature of any future

transactions planned between the
parties and the terms involved
11. Which of the following is not a
related party?
A: A shareholder of the entity that
holds one percent stake in the
entity.
12. Which of the following would not be
considered compensation in
relation to disclosure of key
management personnel
compensation?
A: Reimbursement of out-of-pocket
expenses
13. Which of the following is not a
mandated disclosure about related
party transactions?
A:Names of all of the associates
that an entity has dealt with during
the year
14. Which of the following is not a
required minimum disclosure about
related party transaction?
A: The amount of similar
transaction with unrelated parties
to establish that comparable
related party transaction has been
entered at arms length
15. Which of the following is not
required as a separate related
party disclosure?
A: Joint venture in which the entity
is a venturer
16. All of the following fall within the
definition of a entitys related party
except
A: The partner of a key manager is
a major supplier of the entity
17. Which of the following should be
included in key management
personnel compensation?
A: Social security contributions and
postemployment benefits
18. An entity has a subsidiary and is a
venture in a joint venture. During
the financial year-end, the entity
sold goods to both subsidiary and
joint venture. Consolidated
financial statements are prepared
combining the financial statements
of the entity and the subsidiary. In

the separate financial statements

of the entity for the current year,
disclosure is required for
transactions with
A: Both subsidiary and joint
venture
19. An entity completed the following
transactions in the current year
I.
Sold a car to the uncle of the
entitys finance director.
II.
Sold goods to another entity
owned by the daughter of the
entitys managing director
A: II only
20. An entity has entered into a joint
venture with an affiliate to secure
access to additional inventory.
Under the joint venture agreement,
the entity will purchase the output
of venture at prices negotiated on
an arms length basis. Which of the
following must be disclosed about
the related party transaction?
I.
The amount due t the venture
at the end of the reporting
period
II.
The peso amount of the
purchases during the year
A: Both I & II
21. A parent entity has a wholly-owned
subsidiary. During the current year,
the parent sold goods to the
subsidiary. The subsidiary paid a
part 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 balance and
therefore it has been provided as
uncollectible. Administration costs
are incurred as a result of the
parent credit controllers chasing
the debt. All of the following are
required t be disclosed in relation
to this arrangement except
A: The administration costs of the
credit control department incurred
in chasing the debt.
22. All of the following are related
party transactions except
A: Took out a huge bank loan
23. Which of the following is not a
related party of an entity?
A: An entity providing banking
facilities to the entity
24. Which of the following most likely
would be a related party
transaction requiring disclosure?
A: The entity borrowed P500000
from Eastwest bank with no
scheduled terms for how or when
funds will be repaid.
25. Disclosures of related party
transactions include all of the
following except
A: Sales of inventory by a
subsidiary to the parent.