3. Nature of the transaction (e.g., sale of goods, loan given)
4. Volume of the transaction (amount during the period)
5. Amount outstanding at the balance sheet date
6. Amount written off as bad debts / doubtful debts
7. Any other element necessary for understanding
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### Special Note on KMP Remuneration
Scenario
Treated as Related Party Transaction?
Remuneration paid to KMP
Yes — requires disclosure
Remuneration paid to non-executive director
No — not a related party transaction
Worked example
### Example 1
Example: A Ltd (parent) holds 80% of B Ltd (subsidiary). During FY 2025-26, no transactions occurred between them. Must A Ltd disclose the relationship?
Yes. Parent–subsidiary relationships must be disclosed regardless of whether any transaction took place.
### Example 2
Example: C Ltd paid ₹12 lakh as salary to its Managing Director (KMP). Does this need to be disclosed under AS 18?
Yes. Remuneration paid to KMP is a related party transaction and must be disclosed with the name, relationship, nature, and amount.
### Example 3
Example: D Ltd paid sitting fees of ₹50,000 to an independent (non-executive) director. Disclosure required?
No. Non-executive directors are not KMP, so this payment is not a related party transaction.
⚠️ Common exam mistakes
Omitting parent–subsidiary disclosure when no transaction occurred — the relationship itself must always be disclosed.
Not disclosing KMP remuneration as a related party transaction.
Disclosing only transaction amount without including outstanding balances or bad debts written off.
Bare-Act text Paragraphs 23–26 (Disclosure) · AS 18 – Related Party Disclosures (ICAI) · click to expand
In the case of a holding-subsidiary relationship, disclosure shall be made irrespective of whether there have been transactions between the related parties. For all other related parties, disclosure shall be made only when transactions have taken place. The disclosures shall include: name of related party, nature of relationship, description and volume of transactions, amounts outstanding, amounts written off, and any other elements necessary for understanding.