On January 1, 2015, Sandar Ltd. purchased 32% of Yarder Co.’s 50,000 outstanding common shares at a price of $25 per share. This price is based on Yarder’s net assets. On June 30, Yarder declared and paid a cash dividend of $60,000. On December 31, 2015, Yarder reported net income of $120,000 for the year. At this time, the shares had a fair value of $23. Sandar’s year-end is December 31 and follows ASPE.

Required:

a. Assuming that Sandar does not have any significant influence over Yarder, prepare all the 2015 entries relating to this investment using the held-for-trading (HFT) classification and the cost classification.

b. Prepare all the 2015 entries relating to this investment assuming that Sandar has significant influence over Yarder. Sandar uses the equity method of accounting.