What is the solution of the following case?

Case 1

Delano Inc. (DI) is a private company owned by ten doctors, through their holding companies. The objective of DI's is to manage the doctors' investment portfolios. It actually began as an investment club ten years ago. At that time each doctor's company invested equal amounts of cash and the group met every other week to determine where the money should be invested. This year, they decided to create DI and now each holding company owns one-tenth of the voting shares. DI employs two managers who look after the business on a full-time basis and make the investment decisions with input from the owners. These managers earn a base salary and a percentage of earnings. Earnings per year after taxes now average $1.5 million. During the year, the following transactions took place.

1. Investment in Tryan Ltd.: Purchased common shares of Tryan for $1 million. Tryan allows researchers to use expensive lab equipment (which is owned by the company) on a pay-per-use basis. These shares represent 15% of the total outstanding common shares of the company. Because of its percentage ownership, DI is allowed to appoint one member of Tryan's board of directors. There are three members on the board. One of the DI owners has also been hired as a consultant to the company to advise on equipment acquisitions. These shares have not been designated as held for trading and the company is unsure of how long it will keep them. At least two of the owners of the company are interested in holding on to the investments for the longer term as they use the services of Tryan. During the year Tryan earned $4 million and paid dividends of $500,000.
2. Investment in Gowing Inc.: Purchased preferred shares of Gowing representing 25% of the total outstanding shares for $3.5 million. The shares are cumulative, and accrue dividends of 2% per annum. No dividends have been declared to date. The shares will likely be resold within two months, although no decision has yet been made.
3. Investment in Shopmart Inc: Purchases a 25% interest in Shopmart for $4 million. Shopmart is a large shopping mall outside of Trenton, Ontario. DI bought 25 units of this partnership which represents a 25% interest. Ownership interests vary but each partner has equal rights in decisions. The primary decision that they have made is to hire a management company to oversee the operations of the partnership. During the year Shopmart earned net income of $5 million.
4. Investment in Pietro Ltd.: Purchased 25% interest in voting common shares of Pietro for $1 million two years ago. The investment has been recorded using the equity method and the current carrying amount is $950,000 since the company has been in the drug development stage. Pietro develops drug delivery technology. In the past week a major drug on which the company has spent large amounts (approximately $10 million) for research and development was declined by the Food and Drug Administration for sale in the United States. Most of the $10 million had previously been capitalized in the financial statements of Pietro. This is a significant blow to Pietro as it had been projecting that 50% of its future revenues would come from this drug. Pietro does not produce financial statements until two months after DI's year end.

Although the investments have been mainly in private companies so far, the doctors are thinking of revising their investment strategy and investing in more public companies. They feel that the stock market is poised for recovery and are therefore planning to borrow some funds for investment for the first time. The accountant is currently reviewing the above transactions in preparation for a meeting with the bank. The accountant has been advised that the bank will probably request financial statements prepared under IFRS for the first year-end.

Required:

Assume the role of the company's accountant and analyze the financial reporting issues.