Related party
A) transactions must be disclosed in the footnotes even if the amounts are immaterial.
B) disclosures include the nature of the related party relationship and a description of the transaction.
C) transactions are considered arm's-length transactions.
D) disclosures are required only for public companies.

Question

Quizplus · Accepted Answer

Related party transactions must be disclosed in the footnotes of the financial statements, and the disclosures should include the nature of the related party relationship and a description of the transaction. This is to provide transparency to stakeholders about any potential conflicts of interest or special treatment given to related parties. The materiality of the transaction does not affect the requirement for disclosure. While related party transactions are not necessarily prohibited, they must be carefully scrutinized to ensure they are arm's-length transactions. These disclosure requirements apply to both public and private companies.

Related Party