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One Bhd is a public company supplying electrical hardware and services especially in installing broad kind of electrical appliances and equipment. The company had successfully obtained a government project for installing electrical equipment in hospitals in Selangor. The group accountant, Encik Ali is discussing with the directors of One Bhd related to the application of MFRS10 Consolidated Financial Statements, MFRS11 Joint Arrangements and MFRS128 Investments in Associates and Joint Ventures in preparing the group financial statements.

A contractual agreement between One Bhd, Two Bhd and Three Bhd empowers them to jointly control Money Bhd. The three companies invested in Money Bhd in order to complete the project as scheduled. Decisions related to the relevant business activities of Money Bhd should have unanimous consent of all the companies sharing the control. Since One Bhd is the highest investor of 40% in Money Bhd, Encik Ali was contented with an idea that the investment in Money Bhd should apply the acquisition method and the financial statements of Money Bhd should be consolidated with One Bhd in accordance with MFRS10 Consolidated Financial Statements.

REQUIRED: 1. State your opinion on Encik Alis view related to above issue. Discuss your opinion with reference to the relevant MFRSs. (MFRS10 Consolidated Financial Statements, MFRS11 Joint Arrangements and MFRS128 Investments in Associates and Joint Ventures).

(10 marks)

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