journal entry sheet 2 record the dividend received from foreign subsidiary 3 record the equity I the net income of the foreign subsidiary

4 record the parents share if the translation adjustment from the translation of the subsidiary account

5 record the amortization of the differential

6 record the translation adjustment applicable to the differential

On January 1, 2005. Pitate Company acquired all of the outstanding stock of Ship Inc, a Norwegian company, at a cost of $158.400. Ship's net assets on the date of acquisition were 700,000 kroner (NKI). On January 1, 20X5. the book and fair values of the Norwegian subsidiary's identifiable assets and liabilities approximated their fair values except for property, plant and equipment and patents acquired The fair value of Ship's property, plant, and equipment exceeded its book value by $18,000. The remaining useful life of Ship's 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. Ship's trial balance on December 31, 20X5, in kroner, follows: Credits NKT Debits 160,000 2.22,900 281,000 616,900 NKI Accounts Receivable (net) Inventory Property, plant & Equipment Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Sales cost of Goods Sold Operating Expenses Depreciation Expense Dividends Paid Total 159,000 97.000 20,000 450,000 230,000 754,000 422,000 119,000 51,000 42,000 Nkr1,913,000 NKRI, 913, GO 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. Ship's 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. Pirate's income from its own operations was $235,000 for 20X5, and its total stockholders' equity on January 1, 20X5, was $3,500,000. Pirate declared $100,000 of dividends during 20X5. 6. Exchange rates were as follows: July 1, 20x3 December 30, 20X4 January 1, 20x5 July 1, 20x5 December 15, 20X5 December 31, 20x5 Average for 20x5 NK 1 1 1 1 1 1 1 5 6.15 0.18 0.18 = 0.19 = 0.205 = 0.21 = 0.20 Prey 1 of 2 Next > 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. Ship's 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. Pirate's income from its own operations was $235,000 for 20X5, and its total stockholders' equity on January 1, 20X5, was $3,500,000. Pirate declared $100.000 of dividends during 20X5. 6. Exchange rates were as follows: NKT 1 1 1 July 1, 20X3 December 30, 20X4 January 1, 2exs Duly 1, 2005 December 15, 2005 December 31, 20X5 Average for 20x5 $ 0.15 0.18 = 0.18 = 0.19 = 0.205 = 0.21 = 0.20 1 1 1 1 Required: a. Prepare a schedule translating the trial balance from Norwegian kroner into U.S. dollars. Assume the krone is the functional currency. (If no adjustment is needed, select 'no entry necessary.) W PIRATE INC. Trial Balance Translation December 31, 20X5 Item Balance Dollars Cash Accounts Receivable (net) Inventory Property. Plant and Equipment Cost of Goods Sold Operating Expenses Depreciation Expense Dividends Paid Total peidung LANCHES Depreciation Expense Dividends Paid Total Total Debits Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Sales Total Total Credits b. Assume that Pirate uses the fully adjusted equity method. Record all journal entries that relate to its investment in the Norwegian subsidiary during 20X5. Provide the necessary documentation and support for the amounts in the journal entries, including a schedule of the translation adjustment related to the differential. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the purchase of Ship Inc. Prey 1 of 2 Next > b. Assume that Pirate uses the fully adjusted equity method. Record all journal entries that relate to its investment in the Norwegian subsidiary during 20X5. Provide the necessary documentation and support for the amounts in the journal entries, including a schedule of the translation adjustment related to the differential. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction list Journal entry worksheet 1 2 3 4 5 6 Record the purchase of Ship Inc. Note: Enter debits before credits. Date General Journal Debit Credit January 01 Record entry Clear entry View general journal