Zeus Corporation is considering making a significant long$-$term investment in Ares Ltd$.,$ a young and very promising company. Zeus decides to make a smaller investment first, and if Ares turns out to be successful, Zeus intends to make an additional investment to reach significant influence. Ares has $200,000$ shares authorized, and $110,000$ shares outstanding.

On January $1,2023,$ Ares issues Zeus $10,000$ shares for $$400,000$ in cash $($so now there are $120,000$ shares outstanding$).$

Additional information:

On November $1,2023,$ Ares declares a total cash dividend of $$180,000.$

Ares reports $$225,000$ net income for $2023.$ Its stock price on December $31,2023$ is $$38.$

On November $1,2024,$ Ares announces a total dividend of $$270,000$ to be paid on January $2,2025.$

Ares reports $$360,000$ net income for $2024.$ Its stock price on December $31,2024$ is $$44.$

On March $15,2025,$ Zeus is approached by an investment fund which offers to buy all its Ares shares for $$55$ per share, a $25\%$ premium over the current stock price of $$44.$ Zeus accepts the offer and sells the shares on that day.

Instructions

Assuming Zeus uses the fair value through Other Comprehensive Income model $($FV$$OCI$)$ to account for this investment. Prepare the journal entries for fair value adjustment for $2023$ and $2024$ with detailed calculations.