Which of the following is an example of a related party transaction?
A)An action is taken by the directors of Company A to provide additional compensation for vice presidents in charge of the principal business functions of Company A.
B)A long-term agreement is made by Company A to provide merchandise or services to Company B, a long-time, friendly competitor.
C)A short-term loan is granted to Company A by a bank that has a depositor who is a member of the board of directors of Company A.
D)A nonmonetary exchange occurs whereby Company A exchanges property for similar property owned by Company B, an unconsolidated subsidiary of Company A.

Question

Quizplus · Accepted Answer

A nonmonetary exchange between Company A and Company B, an unconsolidated subsidiary of Company A, is an example of a related party transaction. Related parties are entities that have the ability to significantly influence the financial and operating policies of the other entity or that are under common control. Since Company B is an unconsolidated subsidiary of Company A, they are considered related parties. The other choices do not involve related parties.

Which of the Following Is an Example of a Related