Support Ltd's Investment in Always There: Classification and Accounting Treatment

(a) The investment in Always There by Support Ltd should be classified as an equity investment in the consolidated financial statements at 30 June 2023. This is because Support Ltd has purchased ordinary shares in Always There and therefore has a residual interest in the net assets of the company. According to AASB 9 Financial Instruments, equity investments are those investments that are not classified as financial assets at fair value through profit or loss or loans and receivables. Appendix A to AASB 9 also states that equity investments are those that are held for the purpose of participating in the issuer's net assets. In this case, Support Ltd has invested in Always There for the purpose of participating in the company's climate change community support programs and initiatives, which aligns with the company's principle objective as stated in its constitution.

The additional information that would further develop the argument for the classification of the investment in Always There is the fact that Always There's constitution states that it retains each year's funding surplus and cannot make an annual distribution to either Support Ltd or Equal Bank Ltd. This indicates that Support Ltd's investment is not for the purpose of earning a return on investment, but rather to support the company's climate change community support programs and initiatives.

(b) The subsequent accounting treatment of the equity investment in Always There by Support Ltd would be to recognize the investment at cost in the consolidated financial statements. Any changes in the fair value of the investment are not recognized in the income statement but are disclosed in the notes to the financial statements. The impact on two specific account balances in the Support Ltd consolidated financial statements at 30 June 2023 would be as follows:

1. Investment in Always There: The investment in Always There would be recognized at cost in the consolidated statement of financial position. If the investment was made at $800,000, this amount would be recorded as the carrying value of the investment.

2. Share of profit of associates and joint ventures: As Always There is not an associate or joint venture of Support Ltd, there would be no impact on this account balance.

Overall, the investment in Always There would have a positive impact on the consolidated financial statements of Support Ltd, as it aligns with the company's support program operations and corporate social responsibility objectives.