PQR Ltd. is a manufacturing company that has several subsidiaries and joint ventures. During the financial year, it sold machinery worth 2 crores to…

CA Intermediate · Advanced Accounting · PYQS · January 2026
PQR Ltd. is a manufacturing company that has several subsidiaries and joint ventures. During the financial year, it sold machinery worth 2 crores to one of its subsidiaries, STU Pvt. Ltd., at arm's length price. The company also paid 50 lakhs in remuneration to its CEO and CFO. Additionally, PQR Ltd. received a loan of 1 crore from its holding company, LMN Ltd. All these transactions were disclosed separately in the notes to accounts of the financial statements. Which of the following statements correctly reflect the application of AS 18 in the above scenario?
(A) AS 18 does not apply to transactions with subsidiaries.
(B) Remuneration paid to CEO and CFO need not be disclosed under AS 18.
(C) AS 18 requires disclosure of related party transactions such as sale of machinery, loans, and managerial remuneration.
(D) AS 18 applies only to financial institutions and banks.

Suggested Answer and Working Notes:

Correct Answer: Option (C)

AS 18 requires disclosure of related party transactions such as sale of machinery, loans, and managerial remuneration.

Topics: AS 21, AS 18, Applicability of AS

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