David Is the General Manager of Awesome Limited and Is

question 5

Multiple Choice

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.

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Definitions:

Income Statement

A financial statement that reports a company's revenues and expenses over a specific period, ending with the net earnings or losses.

Operating Activities

Activities directly related to the operating aspect of a business, such as selling products, managing costs, and paying salaries.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life.

Operating Activities

Business functions directly related to providing goods or services, such as sales, production, and day-to-day administration.