Study the scenario below and answer the question that follows: Requir...
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Study the scenario below and answer the question that follows:
Adam Ltd Adam Ltd is a manufacturing company that has significant transactions with related parties. During the year ended 31 December 2024, the following related party transactions occurred: 1. Adam Ltd sold goods to its wholly owned subsidiary, Evelyn Ltd, at a price of R400 000. The goods were delivered on 15 October 2024. 2. Evelyn resold these goods to external customers for R1 200 000 in the same year. 3. The fair value of the goods sold by Adam Ltd to Evelyn was R450 000. 4. Adam Ltd also provided consulting services to one of its associates, Able Ltd, for which it received R150 000. The services were rendered evenly throughout the year. 5. Able Ltd paid R100 000 upfront, and the remaining R50 000 will be settled in the following financial year. Source: Adapted from Gregory, H. 2024. |
Required:
Prepare the related party note of Adam Ltd’s in the notes to the annual financial statements for the year ended 31 December 2024, following the requirements of IAS 24. Assume that Adam Ltd recognises revenue when control of goods or services is transferred. (10 Marks)
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