Related Party Disclosures

ASC 850 is a disclosure-only Topic: it tells you what to say about related party transactions and control relationships, but supplies no recognition or measurement rules (those live in other Topics). Under 850-10-50-1, financial statements must disclose material related party transactions — other than compensation arrangements, expense allowances, and similar ordinary-course items — including the nature of the relationship, a description of the transactions (even those given no or nominal accounting recognition, such as free services received per 850-10-05-5), dollar amounts for each income statement period, effects of changes in the method of establishing terms, and amounts due to/from related parties at each balance sheet date; intercompany transactions eliminated in consolidation need not be disclosed in those statements. Two guardrails matter most: receivables from officers, employees, or affiliated entities must be presented separately (850-10-50-2), and arm's-length equivalence may not be represented unless substantiated (850-10-50-5); a significant common ownership or management control relationship must be disclosed even if no transactions occurred (850-10-50-6). Subtopic 850-972 simply applies these requirements to common interest realty associations, flagging insurance, maintenance, or management services provided by board members, officers, or developers (850-972-50-1).

Subtopics

1. 10Overall33 ¶

   ASC 850-10 is a disclosure-only subtopic requiring financial statements to disclose material related party transactions and certain common control relationships. Disclosures cover the nature of the relationship, a description and dollar amounts of transactions for each income statement period, and amounts due to/from related parties at each balance sheet date. It provides no accounting or measurement guidance — recognition and measurement of related party transactions is addressed in other Topics.

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2. 972Real Estate—Common Interest Realty Associations3 ¶

   This Subtopic applies the general related party disclosure requirements of Topic 850 to common interest realty associations (CIRAs), such as condominium and homeowners' associations. Its core point is that when board members, officers, or developers provide services to the association — for example insurance, maintenance, or management services — those transactions may require related party disclosure under Topic 850. Its scope follows that of Subtopic 972-10 (see 850-972-15-1).

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