on Schweser notes page 33 of book 3, number 3, it says it’s necessary to recognize revenue that the transaction must be an arm’s length transaction with an independent partry. What is an arm’s length transaction?
from investorwords.com A transaction between two related or affiliated parties that is conducted as if they were unrelated, so that there is no question of a conflict of interest. Or sometimes, a transaction between two otherwise unrelated or affiliated parties.
in canada for example you can not sell a relative something at an obvious smaller price than the market price- because that would help you not pay some taxes etc. if that happens the tranzaction is considered to happen at the higher of proceeds and market price