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A Ltd. controls B Ltd. B Ltd. has an associate AC Ltd. From A Ltd.'s perspective, is AC Ltd. a related party?
AYes, but only if A Ltd. holds a direct shareholding in AC Ltd.
BYes, but only if A Ltd. and AC Ltd. have actually transacted during the year
CNo, because the relationship between A Ltd. and AC Ltd. is too remote
DYes, because an entity is related when it is an associate of a member of a group of which the reporting entity is a member
Answer & Solution
Correct answer: D. Yes, because an entity is related when it is an associate of a member of a group of which the reporting entity is a member
Para 9(b)(ii) of Ind AS 24 treats an entity as related when it is an associate or joint venture of a member of a group of which the reporting entity is a member. Since B Ltd. is part of A Ltd.'s group, AC Ltd. (associate of B Ltd.) is a related party of A Ltd. — no direct shareholding by A Ltd. or actual transactions are needed.
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