QUESTION 2

Dameeya and Delischa discuss the application of MFRS 10, MFRS 11 and MFRS 128 in preparing the group financial statements of their employer, Mega Bhd. One of the issues was the investment in Dely Bhd. A contractual agreement between Mega Bhd, Turkiya Bhd and Bee Bhd enables them to jointly control Dely Bhd and decisions about relevant business activities of Dely Bhd should have the unanimous consent of all the companies sharing the control. Since Mega Bhd is the highest investor in Dely Bhd with 40% interest, Dameeya and Delischa were contented with the idea that the investment in Dely Bhd should apply the acquisition method and the financial statements of Dely Bhd should be consolidated with Mega Bhd in accordance with MFRS 10.

b)Oak Bhd acquired 40% of the 100 million ordinary shares issued by Beech Bhd. Recently, Beech Bhd redeemed (share buy back) 30 million of the shares from the market other than Oak Bhd. Discuss the relationship of Oak Bhd and Beech Bhd before and after the share buy back.

(5 marks)