Related Party Transactions Analysis

This assignment analyzes related-party transactions undertaken by Nike Australia Pty Ltd. It examines transactions with entities like Nike European Operations Netherlands B.V, Nike Trading Company, and Nike New Zealand Company, focusing on services rendered, distribution agreements, and administration charges. The analysis also evaluates the disclosures made by Nike Australia Pty Ltd regarding these transactions in accordance with AASB 124 and other reporting standards.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student:
Name of the University:
Author’s Note:

1
CORPORATE ACCOUNTING
Table of Contents
Answer to Question No 1...........................................................................................................2
Answer to Question No 2...........................................................................................................2
Answer to Question No 3...........................................................................................................3
Reference List............................................................................................................................4

2
CORPORATE ACCOUNTING
Answer to Question No 1
Assigned Company name Related party
category +
Type of related party
transaction*
Related party
amount
(full dollar
amount)
Nike European Operations
Netherlands B.V
Parent Entity Rendering or receiving
of services.
Undisclosed
Nike Trading Company Related Party Distribution agreement $23,908,968
Nike Inc Parent Entity Purchase of goods that
is sold in the
Australian market by
Nike Australia Pty
Ltd.
Undisclosed
Nike New Zealand
Company
Related Party Various administration
charges
$2,160,234
Answer to Question No 2
It has been observed that Nike European Operations Netherlands B.V is one of the
parent entities and there has not been any mention about any sort of transaction among them.
It has been observed that Nike Australia Pty Ltd has key personal and management
compensation in the mode of salary and fee paid to them for their services (S1.q4cdn.com
2017).
It has been observed that Nike Australia Pty Ltd in the year 2015, went into a
distribution agreement with their related party Nike Trading Company and therefore due to
this agreement, Nike Australia makes most of their purchases predominantly from Nike
Trading Company. There have been other agreements were even agreed upon by Nike

3
CORPORATE ACCOUNTING
Australia Pty in order to bring back various marketing and other costs. It is seen that cost
relating to $23,908,968 was charged back to the Nike Trading Company. It is seen that Nike
Australia Pty Company on behalf of Nike New Zealand have been undertaking numerous
management and administration services. Such costs are gained back through the
management fee and have been offset against the administration costs that are seen in the
income statement (Malak, Chern and Shabani 2017).
The transactions that have been undertaken with respect to the related parties have
been mainly due to the purchase of the products that have been sold by Nike Australia Pty
Ltd in Australia. These transactions have been fundamental in order to maintain competitive
edge in the Australian economy and to continue their business in Australia effectively.
Answer to Question No 3
The disclosures that have been undertaken by the organization are in accordance to
the AASB 124 and the Corporations Act 2001 and the other professional requirements of
reporting. The statement of the report provides a fair and true view of the financial scenario
of Nike Australia Pty Ltd for the year ended 2015 and its performance in the accounting year
that ended on that date. There have been rational aspects to believe that the organization will
be able to pay their loans and debts and when they become payable and due (Yarram and
Rice 2017). The transactions that have been undertaken are in compliance with AASB 124 as
it is seen that all the transactions have been taken effectively. By complying with the AASB
124, the transactions have been true and authentic and hence no hidden costs are available
within the transactions. It is seen that the transactions that have been undertaken are not in
the market value as transactions in market value as there are numerous incentives behind it
(Moschakis, Jerram and Loftus 2016). The incentives are inclusive of various commissions

4
CORPORATE ACCOUNTING
and compensations along with administration and the management fee that are charged back
in order tom gain the cost.
Reference List
Malak, S.S.D.A., Chern, O.S. and Shabani, N.A., 2017. Disclosure of Executive Directors’
Remuneration from Multiple Theoretical Lenses and Cultural Perspective. Advanced Science
Letters, 23(4), pp.3151-3154.
Moschakis, N.D., Jerram, C. and Loftus, J., 2016. Voluntary financial reporting strategies of
South Australian independent schools. Third Sector Review, 22(1), p.25.
S1.q4cdn.com. (2017). NIKE FY2015 Annual Report. [online] Available at:
http://s1.q4cdn.com/806093406/files/doc_financials/2015/ar/ [Accessed 9 Oct. 2017].
Yarram, S.R. and Rice, J., 2017. Executive compensation among Australian mining and non-
mining firms: Risk taking, long and short-term incentives. Economic Modelling, 64, pp.211-
220.