AS 18 Related Party Transactions

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D20BFS036-Harshavardini K.B (Querist)
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02 September 2024 Hi sir/ mam
Please clarify my doubt regarding AS18
1. Is Subsidiary's Associate is Related party the Reporting entity (i.e Holding company of Subsidiary) ?
2. Is Associate's subsidiary is related to to Reporting entity ( i.e investing entity)
3. Is subsidiary's or Associates JV is Related Party to the reporting entity?
Thankyou

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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12 August 2025 Hey! Your queries on AS 18 (Related Party Transactions) are important for correct disclosure. Let me clarify each one:
1. Is Subsidiary’s Associate a Related Party to the Reporting Entity (Holding Company of Subsidiary)?
No, not automatically.
Related party relationship is direct or indirect control, significant influence, or common control.
The holding company’s subsidiary’s associate is related to the subsidiary, but not necessarily related to the holding company.
Only if the holding company has control or significant influence over that associate does it become a related party.
2. Is Associate’s Subsidiary Related to the Reporting Entity (Investing Entity)?
No, not automatically.
The associate’s subsidiary is related to the associate, but not directly related to the investing company unless the investing company has control/significant influence over the associate’s subsidiary.
AS 18 considers related parties based on control/influence; indirect relations beyond associate’s immediate control are not related parties.
3. Is Subsidiary’s or Associate’s JV a Related Party to the Reporting Entity?
Yes, if the JV is controlled or significantly influenced by the subsidiary or associate.
AS 18 states that a joint venture of a subsidiary or associate is considered a related party to the reporting entity if the reporting entity has control, joint control, or significant influence over that JV.
So, if the reporting entity’s control extends through the subsidiary or associate to the JV, it is a related party.
Summary Table:
Query Related Party to Reporting Entity?
Subsidiary’s Associate Not necessarily unless control/influence exists
Associate’s Subsidiary Not necessarily unless control/influence exists
Subsidiary’s or Associate’s JV Yes, if reporting entity has control/joint control/significant influence

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