Item2

50points

eBookAskReferences

Check my workCheck My Work button is now enabled

Item 2

On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $158,400. Ships net assets on the date of acquisition were 700,000 kroner (NKr). On January 1, 20X5, the book and fair values of the Norwegian subsidiarys identifiable assets and liabilities approximated their fair values except for property, plant, and equipment and patents acquired. The fair value of Ships property, plant, and equipment exceeded its book value by $18,000. The remaining useful life of Ships equipment at January 1, 20X5, was 10 years. The remainder of the differential was attributable to a patent having an estimated useful life of 5 years. Ships trial balance on December 31, 20X5, in kroner, follows:

	Debits			Credits
Cash	NKr	158,000
Accounts Receivable (net)		202,000
Inventory		296,000
Property, Plant & Equipment		624,000
Accumulated Depreciation				NKr	167,000
Accounts Payable					97,000
Notes Payable					197,000
Common Stock					450,000
Retained Earnings					250,000
Sales					759,000
Cost of Goods Sold		417,000
Operating Expenses		116,000
Depreciation Expense		57,000
Dividends Paid		50,000
Total	NKr	1,920,000		NKr	1,920,000

Additional Information:

1. Ship uses the FIFO method for its inventory. The beginning inventory was acquired on December 31, 20X4, and ending inventory was acquired on December 15, 20X5. Purchases of NKr420,000 were made evenly throughout 20X5.
2. Ship acquired all of its property, plant, and equipment on July 1, 20X3, and uses straight-line depreciation.
3. Ships sales were made evenly throughout 20X5, and its operating expenses were incurred evenly throughout 20X5.
4. The dividends were declared and paid on July 1, 20X5.
5. Pirates income from its own operations was $261,000 for 20X5, and its total stockholders equity on January 1, 20X5, was $3,600,000. Pirate declared $140,000 of dividends during 20X5.
6. Exchange rates were as follows:

	NKr		$
July 1, 20X3	1	=	0.15
December 30, 20X4	1	=	0.18
January 1, 20X5	1	=	0.18
July 1, 20X5	1	=	0.19
December 15, 20X5	1	=	0.205
December 31, 20X5	1	=	0.21
Average for 20X5	1	=	0.20

A. Prepare a schedule that determines Pirates consolidated comprehensive income for 20X5. (Amounts to be deducted should be indicated with a minus sign.)

Income from Pirates operations for 20X5, exclusive of income from the Norwegian subsidiary	$261,000
Add: Income from the Norwegian subsidiaryselected answer correct	???
Deduct: Amortization of differentialselected answer correct	???
Pirates Net Income
Add: Translation adjustmentselected answer correct	???
Pirates Consolidated Comprehensive Income

B. Compute Pirates total consolidated stockholders equity at December 31, 20X5.