Ministry of Finance, Questions Relating to the Accounting Treatment of Asset Sales Between Affiliated Parties Tentative Provisions

Issued: December 21 2001
Effective: as of date of issue
Applicability: Transactions between a listed company and its affiliated parties shall be handled in accordance with the Provisions if there is no conclusive evidence indicating that the prices of the transactions are fair (Section One). For the purposes of the Provisions, ›Õffiliated parties?shall be determined according to the circumstances specified by the relevant enterprise accounting system and Disclosure of Relationships and Transactions between Affiliated Parties for Enterprise Accounting Guidelines (Section Seven).

Main contents: The Provisions set out the accounting treatment of certain types of affiliated transactions. These affiliated transactions include sale or transfer of assets (including commodities, accounts receivable, fixed assets, intangible assets and other assets) from a listed company to an affiliated party (Section Two), transfer of liabilities between affiliated parties (Section Three), bearing the expenses of an affiliated party (Section Four), operating on appointment by an affiliated party (Section Five), and borrowing of funds between affiliated parties (Section Six).
Related legislation: Disclosure of Relationships and Transactions between Affiliated Parties for Enterprise Accounting Guidelines, Jun 12 1997, CLP 1997 No. 7 p4