ECONOMICS

Detailed explanation-1: -Examples of common transactions with related parties are: Sales, purchases, and transfers of real and personal property.

Detailed explanation-2: -If Colin sells the house to the stranger, it would be an arm’s length transaction because both parties are independent and acting in their own self-interest.

Detailed explanation-3: -The most common types of related parties are business affiliates, shareholder groups, subsidiaries, and minority-owned companies. Related-party transactions can include sales, leases, service agreements, and loan agreements. As mentioned above, these types of transactions are not necessarily illegal.

Detailed explanation-4: -An arm’s length transaction refers to a business deal in which buyers and sellers act independently without one party influencing the other. Arm’s length transactions assert that both parties act in their own self-interest and are not subject to pressure from the other party.