Illustrative Examples

The following examples accompany, but are not part of, AASB 124 Related Party Disclosures.

They illustrate:

• the partial exemption for government-related entities; and

• how the definition of a related party would apply in specified circumstances.

In the examples, references to ‘financial statements’ relate to the individual, separate or consolidated financial statements.

Partial Exemption for Government-related Entities

Example 1 – Exemption from Disclosure (paragraph 25)

IE1 Government G directly or indirectly controls Entities 1 and 2 and Entities A, B, C and D. Person X is a member of the key management personnel of Entity 1.

Illustration of partial exemption for entities but not for individuals.

IE2 For Entity A’s financial statements, the exemption in paragraph 25 applies to:

(a) transactions with Government G; and

(b) transactions with Entities 1 and 2 and Entities B, C and D.

However, that exemption does not apply to transactions with Person X.

Disclosure Requirements when Exemption Applies (paragraph 26)

IE3 In Entity A’s financial statements, an example of disclosure to comply with paragraph 26(b)(i) for individually significant transactions could be:

Example of disclosure for individually significant transaction carried out on non-market terms

On 15 January 20X1 Entity A, a utility company in which Government G indirectly owns 75 per cent of outstanding shares, sold a 10 hectare piece of land to another government-related utility company for CU5 million.[2] On 31 December 20X0 a plot of land in a similar location, of a similar size and with similar characteristics, was sold for CU3 million. There had not been any appreciation or depreciation of the land in the intervening period. See note X [of the financial statements] for disclosure of government assistance as required by AASB 120 Accounting for Government Grants and Disclosure of Government Assistance and notes Y and Z [of the financial statements] for compliance with other relevant Australian Accounting Standards.

Example of disclosure for individually significant transaction because of size of transaction

In the year ended December 20X1 Government G provided Entity A, a utility company in which Government G indirectly owns 75 per cent of outstanding shares, with a loan equivalent to 50 per cent of its funding requirement, repayable in quarterly instalments over the next five years. Interest is charged on the loan at a rate of 3 per cent, which is comparable to that charged on Entity A’s bank loans. See notes Y and Z [of the financial statements] for compliance with other relevant Australian Accounting Standards.