The Chief Financial Officer (CFO) of Large Mart has been asked to determine if Large Mart is a reporting entity. Because the CFO is unsure about what a reporting entity is, or what that would mean for Large Mart, he has asked you to write a report that covers the following points:

1) (Question 1-A) explain the reporting entity concept, and (Question 1-B) outline the criteria that must be used to determine if Large Mart is a reporting entity? (Please provide a detailed explanation of all applicable criteria)

IMPORTANT NOTE: you are NOT required to make a decision on whether or not Large Mart meets the reporting entity criteria!

2) (Question 2-A) explain any special requirements that the CFO and the Large Mart Accounting Department should be aware of when accounting for transactions/events IF Large Mart would meet the reporting entity criteria, and (Question 2-B) discuss if Large Mart would be more/or less restricted/limited in its accounting procedures IF Large Mart would meet the reporting entity criteria.

Please write the report requested by the CFO. Your report should be approximately 500 words (+/- 10%) in length for question 1a & b, and 500 words (+/- 10%) in length for question 2a & b. You can receive a maximum of five (5) marks for each question.

The appropriate acknowledgement (referencing) of source material used to develop your report will attract one (1) mark. An additional one (1) mark will be given for the number of sources other than the textbook that were used to develop the arguments in Part A of your assignment. The use of a MINIMUM of three (3) appropriate sources other than the textbook is required (see below for details). However, in order to receive full marks for your use of resources, you will need to show that you have used substantially more than three (3) resources.

Part B: This part of the assignment is worth a total of three (3) marks (details are provided below).

The Research & Development (R&D) Department of Large Mart is currently working on the development of a study pillow that allows students to upload study material into their brain whilst sleeping. In order to complete this project, Large Mart has purchased the following items:

1) A microscope for $150,000

2) A high performance computer for $50,000

The microscope was purchased on credit on the 1 May 201x and Large Mart received the microscope on the same day. The high performance computer was purchased (and received) on the 15 May 201x and paid via bank transfer on that day.

The R&D Department estimates that the microscope will have a useful life of 6 years, whilst the high performance computer will have a useful life of 2 years. The microscope will be depreciated using the straight line method and the high performance computer will be depreciated the same way all computer equipment at Large Mart is depreciated (see Large Mart Depreciation Schedule in Topic 2).

On the 1 June 201x, the accounting department of Large Mart decides to revalue the microscope and the high performance computer to their fair values. On the 1 June 201x, the microscope has a fair value of $180,000 and the high performance computer has a fair value of $20,000.

Required:

1) (1 mark) Provide all journal entries that are necessary in the books of Large Mart to account for the depreciation of the microscope and the high performance computer for the MONTH ended 31 May 201x and provide a detailed outline of all required calculations.

2) (1 mark) Provide all journal entries that are necessary in the books of Large Mart to account for the revaluation of the microscope on the 1 June 201x and provide a detailed outline of all required calculations.

3) (1 mark) Provide all journal entries that are necessary in the books of Large Mart to account for the revaluation of the high performance computer on the 1 June 201x and provide a detailed outline of all required calculations.