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Equity investments

On January 1, 2017, DeePockets Inc. purchases 1,000 shares of Target Co. for $125 per share. DeePockets follows IFRS. On September 30, 2017, DeePockets receives a dividend of $8.00 per share. On December 31, 2017, the shares are trading actively for $150 per share. Target reports income for the year ended December 31 2017 of $25,000. On March 31, 2018, a dividend of $6.00 per share is received, and on September 30, 2018 a further dividend of $ 5.00 per share is received. On December 31, 2018, the shares are actively trading at $95 per share. Target reports a loss of $5,000 for the year ended December 31, 2018. On January 2, 2019, the shares are sold for $115 per share.
 
Required: 1. Assume that the fair value through net income method is used. Prepare entries required on each date. (separate reporting of dividends is not required) 2. Assume that the fair value through net other comprehensive income method is used. Prepare entries required on each date. 3. Assume that the investment represents 40% of the voting shares, and that the book value of Target Co. is $312,500. 40% voting share does not give DeePockets control over Target. Identify the correct method of accounting for the investment, and provide journal entries required on each date above.

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