Task ? 4 Specification: The following relationships exist among undertakings1, 2

Question

Task ? 4         

Specification:

The following relationships exist among undertakings1, 2, 3, 4, 5 and 6:

Undertaking 1        Misters A and B are the board members. The largest shareholder is Mister D – 45%;

Undertaking 2        is entirely owned by Undertaking 1;

Undertaking 3        is entirely owned by Mr. B;

Undertaking 4        is entirely owned by Mr. D;

Undertaking 5        Chairman is the son of Mr. A;

Undertaking 6        Wife of Mr. B is its employee.

Assignment:

To determine related parties to Undertaking 1

Explanation / Answer

Undertaking 2 Relationship exists yes Reason = The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others) Undertaking 3 Relationship exists yes Reason = The entity is controlled or jointly controlled by a member of the key management personnel of the reporting entity Undertaking 4 Relationship exists yes Reason = A Person having significant influence over the reporting entity has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity) Undertaking 5 Relationship exists yes Reason = A person or a close member of that person's family is a member of the key management personnel of the reporting entity or of a parent of the reporting entity and the other entity is controlled or jointly controlled by such person. Undertaking 6 Relationship exists No Reason = No direct or indirect relationship exists, neither controlled nor significantly influenced by any person of reporting entity or relative of such person.

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