Principal risk and Unrelated party: Difference between pages

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The risk of losing the entire principal amount of a contract or investment.
The concept of related and unrelated parties arises in the context of the arm's length principle.
 
Under the arm's length principle, transactions between related parties are conducted and priced as if they were unrelated, so that there is no question of either:
 
* A conflict of interest, or
* Tax avoidance.
 
 
Unrelated parties are companies or other entities which are independent of each other, so that they are normally assumed to be dealing with each other at fair market prices.
 
 
Relevant accounting standards include Section 33 of FRS 102.
 


== See also ==
== See also ==
* [[Credit risk]]
*[[FRS 102]]
* [[Principal]]
*[[Transfer pricing]]
* [[Replacement cost risk]]
*[[Arm%E2%80%99s length principle]]
*[[Related party]]


[[Category:Accounting,_tax_and_regulation]]

Revision as of 13:14, 8 October 2020

The concept of related and unrelated parties arises in the context of the arm's length principle.

Under the arm's length principle, transactions between related parties are conducted and priced as if they were unrelated, so that there is no question of either:

  • A conflict of interest, or
  • Tax avoidance.


Unrelated parties are companies or other entities which are independent of each other, so that they are normally assumed to be dealing with each other at fair market prices.


Relevant accounting standards include Section 33 of FRS 102.


See also