Dear students, this topic on reporting performance involving related party transactions, earnings per share and impairment of assets enables you understand some concepts that you have been dealing with but with no deep understanding on them. This special reporting increases the level of accuracy in reporting financial statements which helps fulfill the informed decision making.
Reporting of related party transactions helps the investors to know and consider the effect of the inter-company transaction between the group on final results. Related parties are those companies which sell goods each other like parent to subsidiaries/sub-subsidiaries/associates/joint ventures owned by one big parent company and vice versa. If this is the case, the selling company will be influenced by the group policy in fixing selling price to related party and hence to some extent this will impact the results.
Impairment of one asset item or a group of assets or even goodwill is well understood under this topic beyond calculations in % like in consolidation process
You will make a point also on Earnings per share beyond what you calculated in ratios analysis. Whereas in ratios, you considered the amount of earnings after tax and number of ordinary shares outstanding, you have not included the effect of treasure shares, bonus shares, rights shares and future options that may be exercises by owners of preference shares or loan capital (convertible bonds of all kinds).
I advise you to read the materials, reason of the applicability and retain a good knowledge on these reporting requirements in the angle of decision making based on a well informed source from preparation stand point.