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Section 3840 applies to:
- Related party transactions in the financial statements of profit-oriented enterprises.
Section does not apply to:
- Management compensation arrangements, including employee future benefits accounted for in accordance with Section 3462, Employee
- Future Benefits, expense allowances and other similar payments, including loans and receivables, to individuals, in the normal course of business.
- Transactions between an enterprise preparing non-consolidated financial statements and subsidiaries:
- That are only controlled through means other than voting interests, potential voting interests, or a combination thereof, and
- for which control is the only basis for the related party relationship. Transactions with such enterprises are governed by other Sections, such as Section 3280, Contractual Obligations.