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of <h1>Understanding Related Parties: Definition and Connections in Financial Statements Explained, Covering Control and Influence Dynamics</h1> A related party is defined as a person or entity connected to the entity preparing financial statements, known as the reporting entity. This includes individuals or close family members who have control, joint control, significant influence, or are part of the key management personnel of the reporting entity or its parent. The definition extends to include subsidiaries of an associate and subsidiaries of a joint venture, establishing a relationship between an associate's subsidiary and an investor with significant influence over the associate.
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