Frederic Liszt is a newly appointed executive director of Piano Music Ltd, a listed company that manufacture high-end pianos for concert halls around the world. Frederic has provided consultancy service to Piano Music Ltd for the past 10 years. In the most recent financial year these services amounted to $400,000. Wolfgang Bach is the finance director of Piano Music Ltd. Wolfgang has recently asked his son, Ludwig Bach to undertake an internship within the finance department of Piano Music Ltd, and receive a salary of $30,000 per annum, which is normal compensation for the role. Required:
Frederic Liszt is a newly appointed executive director of Piano Music Ltd, a listed company that manufacture high-end pianos for concert halls around the world. Frederic has provided consultancy service to Piano Music Ltd for the past 10 years. In the most recent financial year these services amounted to $400,000.
Wolfgang Bach is the finance director of Piano Music Ltd. Wolfgang has recently asked his son, Ludwig Bach to undertake an internship within the finance department of Piano Music Ltd, and receive a salary of $30,000 per annum, which is normal compensation for the role.
Required:
Determine whether the
(i) consultancy service provided by Frederic, and
(ii) the internship compensation paid to Ludwig
are related party transitions that should be disclosed in the financial statements of Piano Music Ltd, in accordance with IAS 24 / AASB 124 Related Party Disclosures. Explain your answer.
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