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Power Ltd. acquired 100% of Transmission Ltd. on 15 July 20X1 and disposed of the entire stake on 21 March 20X2. Transmission Ltd. regularly purchases electricity from Power Ltd. throughout the year. In Power Ltd.'s financial statements for the year ended 31 March 20X2, related-party disclosures with respect to Transmission Ltd. should cover transactions for the period:
A15 July 20X1 to 31 March 20X2 — from acquisition until year-end reporting date
BOnly 15 July 20X1 to 21 March 20X2 — when Transmission Ltd. was a subsidiary of Power Ltd.
C1 April 20X1 to 21 March 20X2 — up to the date of disposal of the stake
DThe full financial year, 1 April 20X1 to 31 March 20X2
Answer & Solution
Correct answer: B. Only 15 July 20X1 to 21 March 20X2 — when Transmission Ltd. was a subsidiary of Power Ltd.
Related-party disclosures apply only to the period during which the relationship existed. Power Ltd. and Transmission Ltd. were in a parent-subsidiary relationship only between 15 July 20X1 and 21 March 20X2 — that is the disclosure window. Transactions outside this period are reported as ordinary revenue/purchases, not as related-party transactions.
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