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ASC 850 — Related Party Disclosures

Below is an overview of FASB Accounting Standards Codification Topic 850, Related Party Disclosures, as well as a list of FASB Accounting Standards Updates (ASUs) and proposed ASUs related to this Topic.

Overview

ASC 850-10 notes the following:

 

The Related Party Disclosures Topic provides disclosure requirements for related party transactions and certain common control relationships. Accounting and reporting issues concerning certain related party transactions and relationships are addressed in other Topics.

Information about transactions with related parties is useful in comparing an entity's results of operations and financial position with those of prior periods and with those of other entities. It helps users of financial statements to detect and explain possible differences.

Examples of related party transactions include those between:

  1. A parent entity and its subsidiaries
  2. Subsidiaries of a common parent
  3. An entity and trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of the entity's management
  4. An entity and its principal owners, management, or members of their immediate families
  5. Affiliates.

Transactions between related parties commonly occur in the normal course of business. Examples of common transactions with related parties are:

  1. Sales, purchases, and transfers of real and personal property
  2. Services received or furnished, such as accounting, management, engineering, and legal services
  3. Use of property and equipment by lease or otherwise
  4. Borrowings, lendings, and guarantees
  5. Maintenance of compensating bank balances for the benefit of a related party
  6. Intra-entity billings based on allocations of common costs
  7. Filings of consolidated tax returns.

Transactions between related parties are considered to be related party transactions even though they may not be given accounting recognition. For example, an entity may receive services from a related party without charge and not record receipt of the services. While not providing accounting or measurement guidance for such transactions, this Topic requires their disclosure nonetheless.

The full text of ASC 850 can be found in the FASB Accounting Standards Codification (link to the FASB's Web site; registration required). Also, the full text of the Codification and Deloitte-authored Q&As related to the Codification are available in the Deloitte Accounting Research Tool (DART) Web site (subscription required).

Content from the FASB Accounting Standards Codification® included at http://www.usgaapplus.com is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, and is reproduced with permission.

FASB Accounting Standards Updates

    Proposed FASB Accounting Standards Updates

      No current proposed ASUs on Topic 850.

      Correction list for hyphenation

      These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.