David is the general manager of Awesome Limited and is considered to be the member of key management personnel. The following transactions occurred between David and Awesome Limited:
? David purchased a product of Awesome Limited on normal trading terms;
? David received remuneration from Awesome Limited amounting to £100 000;
? Awesome Limited issued 20 000 options to David, which can be converted into Awesome Limited's shares if target profit margin of 25% is achieved in the next three years.
Which of the above transactions must be disclosed as related party transactions?
A) The purchase of product and David's remuneration.
B) David's remuneration and the grant of options.
C) The purchase of product and the grant of options.
D) All of the above transactions are related party transactions.

Question

David is the general manager of Awesome Limited and is considered to be the member of key management personnel. The following transactions occurred between David and Awesome Limited: 
 ? David purchased a product of Awesome Limited on normal trading terms;
 ? David received remuneration from Awesome Limited amounting to £100 000;
 ? Awesome Limited issued 20 000 options to David, which can be converted into Awesome Limited's shares if target profit margin of 25% is achieved in the next three years.
Which of the above transactions must be disclosed as related party transactions?
A) The purchase of product and David's remuneration.
B) David's remuneration and the grant of options.
C) The purchase of product and the grant of options.
D) All of the above transactions are related party transactions.

Quizplus · Accepted Answer

Related party transactions occur when a company engages in transactions with individuals or entities that are considered related parties, such as key management personnel. David is a member of key management personnel, and therefore any transactions between him and Awesome Limited must be disclosed as related party transactions. The purchase of a product on normal trading terms does not necessarily constitute a related party transaction, but David's remuneration and the grant of options are considered related party transactions and must be disclosed as such. Therefore, option B is the correct answer.

David Is the General Manager of Awesome Limited and Is