Answered step by step
Verified Expert Solution
Question
1 Approved Answer
On January 1 , 2 0 X 5 . Pirate Company acquired all of the outstanding stock of Ship Incorporated. a Norwegian company, at a
On January X Pirate Company acquired all of the outstanding stock of Ship Incorporated. a Norwegian company, at a cost of
$ Ship's net assets on the date of acquisition were kroner NKr On January 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 $ The remaining useful life
of Ship's equipment at January X was years. The remainder of the differential was attributable to a patent having an
estimated useful life of years. Ship's trial balance on December X in kroner, follows:
Addltional Information:
Ship uses the FIFO method for its inventory. The beginning inventory was acquired on December and ending inventory
was acquired on December Purchases of NKr were made evenly throughout
Ship acquired all of its property, plant, and equipment on July and uses straightline depreciation.
Ship's sales were made evenly throughout and its operating expenses were incurred evenly throughout
The dividends were declared and paid on July
Pirate's income from its own operations was $ for and its total stockholders' equity on January X was
$ Pirate declared $ of dividends during
Exchange rates were as follows:
Assume the US dollar is the functional currency, not the krone.
Required:
Prepare a schedule providing a proof of the remeasurement gain or loss. For this part of the problem. Assume that the Norwegian
subsidiary had the following monetary assets and liabilities at January X:
On January X the Norwegian subsidiary has a net monetary liability position of NKr
Note: Amounts to be deducted should be Indleated with a minus sign.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started