Answer the following with respect to AS 18: (i) ABC Ltd. sold goods of ₹ 2,00,000 to its associate company for the 1stquarter ending 30.06.2025.…

(i) As per AS 18, parties are considered to be related if any time during the reporting period one party has the ability to control the other party or exercise significant influence over the other party. Transactions of ABC Ltd. with its associate company for the first quarter ending 30.06.2025 only are required to be disclosed as related party transactions as the company has the ability to exercise significant influence only till 30.6.2025. The transactions for the period in which related party relationship did not exist need not be reported. (ii) In the given case, Arjun Ltd. cannot be said to control the composition of board of directors of Bheem Ltd. as the directors have been appointed in their individual capacity as professionals and not by virtue of their being directors in Arjun Ltd. Hence, it cannot be concluded that the companies are related merely because the majority of the directors of one company became the majority of the directors of the second in their individual capacity as professionals. (iii) In the context of AS 18, a single customer, supplier, franchiser, distributor, or general agent with whom an enterprise transacts a significant volume of business cannot be construed as Related Party Relationship merely by virtue of the resulting economic dependence. There is an economic dependence between the companies but no one controls or exercise significant influence on the other. In the given case, Asha Ltd. need not report Sasha Company as its related party in its financial statements.