Repeat P16-8 assuming that Pugh Company is an IFRS reporter and would like to elect to report the investment at fair value through other comprehensive income if it qualifies for this treatment. Pugh is not holding the investments for trading, nor is it part of contingent consideration in a business combination.

Data from P16-8

Pugh Company purchased 1,800 shares of the Kramer Group common stock for $64,800 (i.e., $36 per share) at the beginning of the current year. There were 36,000 outstanding Kramer shares on the date of acquisition. Total stockholders' equity of Kramer Company is $1,080,000 on the date of acquisition. Kramer reported $360,000 in net income and declared and paid $1.44 per share cash dividends at year-end.

Required

a. Prepare the journal entry to record the purchase of the Kramer shares.

b. Prepare the journal entries necessary to reflect Pugh's share of Kramer's dividends.

c. Prepare the journal entry required to adjust Pugh's investment to its fair value of $54 per share at year-end.

d. Prepare the journal entry necessary to record the sale of 900 Kramer shares for $63 per share at the beginning of the next year.