QUESTION 1 (20 MARKS) The purpose of this test is to enhance learners understanding on the concept of group of companies and how consolidated or group financial statements are prepared, mainly the Consolidated Statement of Comprehensive Income and Consolidated Statement of Financial Position. In November 2011, the Malaysian Accounting Standards Board (MASB) issued Malaysian Financial Reporting Standard (MFRS) 10 Consolidated Financial Statements and a revised MFRS 126 with a new title Separate Financial Statements. MFRS 10, when it becomes effective on 1 January 2013, superseded the requirements relating to the Consolidated Financial Statements in MFRS 127 and Separate Financial Statements. A group of companies exists when one company acquires control over one or more other companies. There are various ways a company can acquire control over other companies, as prescribed in MFRS 10 Consolidated Financial Statements. Required:

(a) Explain the meaning the company who has control over another company is called the parent. (10 marks)

(b) Discuss the FOUR (4) importance of consolidated financial statements.