On January 1, 2015, Verex Co. purchased 10% of Optimal Instrument’s 140,000 shares for $135,000 plus $1,750 in brokerage fees. Management accounted for this investment as an AFS. In October, Optimal declared a $1.10 cash dividend. On December 31, which is Verex’s year-end, the market value of the shares was $9.80 per share. On February 1, 2016, Verex sold 50% of the investment for $12 per share less brokerage fees of $580.
Required:
a. Does Verex follow ASPE or IFRS, and why?
b. Record all the relevant journal entries for Verex for this investment from purchase to sale.