On January $1,20$X$5,$ Pirate Company acquired all of the outstanding stock of Ship Incorporated, a Norwegian company, at a cost of $$158,400.$ Ship$$s net assets on the date of acquisition were $710,000$ kroner $($NKr$).$ On January $1,20$X$5,$ 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 $1,20$X$5,$ 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 $31,20$X$5,$ in kroner, follows:

Debits Credits

Cash NKr $158,000$

Accounts Receivable $($net$)213,000$

Inventory $292,000$

Property, Plant and Equipment $609,000$

Accumulated Depreciation NKr $164,100$

Accounts Payable $108,000$

Notes Payable $208,000$

Common Stock $460,000$

Retained Earnings $250,000$

Sales $724,900$

Cost of Goods Sold $418,500$

Operating Expenses $111,000$

Depreciation Expense $69,000$

Dividends Paid $44,500$

Total NKr $1,915,000$ NKr $1,915,000$

Additional Information:

Ship uses the FIFO method for its inventory. The beginning inventory was acquired on December $31,20$X$4,$ and ending inventory was acquired on December $15,20$X$5.$ Purchases of NKr$420,000$ were made evenly throughout $20$X$5.$

Ship acquired all of its property, plant, and equipment on July $1,20$X$3,$ and uses straight$-$line depreciation.

Ship$$s sales were made evenly throughout $20$X$5,$ and its operating expenses were incurred evenly throughout $20$X$5.$

The dividends were declared and paid on July $1,20$X$5.$

Pirate$$s income from its own operations was $$229,000$ for $20$X$5,$ and its total stockholders$$ equity on January $1,20$X$5,$ was $$3,500,000.$ Pirate declared $$120,000$ of dividends during $20$X$5.$

Exchange rates were as follows:

July $1,20$X$3$ NKr $1=$ $ $0\mathrm{.}15$

December $30,20$X$4$ NKr $1=$ $ $0\mathrm{.}18$

January $1,20$X$5$ NKr $1=$ $ $0\mathrm{.}18$

July $1,20$X$5$ NKr $1=$ $ $0\mathrm{.}19$

December $15,20$X$5$ NKr $1=$ $ $0\mathrm{.}205$

December $31,20$X$5$ NKr $1=$ $ $0\mathrm{.}21$

Average for $20$X$5$ NKr $1=$ $ $0\mathrm{.}20$

Required:

Prepare a schedule providing a proof of the translation adjustment.