On 1 July 2018 Bear Ltd acquired 100 000 shares in Island Ltd at a price of $10 each. There were brokerage fees of $1500. The closing market price of Island Ltd shares on 30 June 2019—which is the entity’s financial year end—was $12. Bear Ltd has not made the election to account for its equity investments at fair value through OCI.

Required:

Provide the required accounting journal entries for Bear Ltd to account for the investment in Island Ltd using fair value through profit or loss.

(a) ABC Pty Ltd is a small proprietary company. The shareholders are Mr. and Mrs. ABC, who also manage the company’s day-to-day operations. The company’s bankers, The Bank, receive monthly management accounts, budgeted cash-flow information, and the year-end statutory accounts.

(b) F Pty Ltd is a large company—one of only two in Australia—involved in the manufacture of widgets. Although the shares are tightly held—by family members— the company employs more than 200 staff. The company has a small number of major suppliers. The company’s sole banker receives the company’s statutory accounts under its borrowing agreement. (c) E Trust is a private trust wherein up to a maximum of 30 members may deposit amounts to be invested in blue-chip equities. Members’ funds consist of units of $1 each. Quarterly reports are produced, which disclose the market value of the trust assets and the values of each member’s entitlements.

Required:

For each of the independent situations identified below, consider and conclude whether the entity is required by the Corporations Act to prepare financial statements and, if so, whether it is a ‘reporting entity’. You should also note the reporting implications of your decision.