On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $152,400. Ship's net assets on the date of acquisition were 860,000 kroner (NKr). 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 $19,400. 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 Debits 230,000 Cash NKr Dook Accounts Receivable 340,000 (net) 380,000 Inventory Property, Plant, & Equipment Print 740,000 Accumulated NKr 230,000 Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings eferences 93,000 385,000 530,000 330, 000 830,000 Sales Cost of Goods Sold Operating Expenses Depreciation Expense Dividends Paid 350, 000 240,000 64, 000 54,000 NEr2,398,000 Ntr2,398, 000 Total 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 NKr360,000 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 $295,000 for 20X5, and $4.300,000 Pirate declared $240,000 of dividends during 20x5 6 Exchange rates were as folows otal stockholders' equity on January 1, 2OX5, was 2 Homework Saved S NKr July 1, 20x3 1= 0.15 December 30, 20x4 1 -0.18 1 0.18 January 1, 20x5 1 0.19 July 1, 20x5 December 15, 20x5 1 0.205 December 31, 20x5 1 0.21 Average for 20x5 1 0.20 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 1, 20X5 nt Monetary ASsets ences Cash NKr 24,000 Accounts Receivable 280,000 (net) Monetary Liabilities Accounts NKr150,000 Payable Notes Payable 220,000 On January 1, 20X5, the Norwegian subsidiary has a net monetary liability position of NKr66,000. (Amounts to be deducted should be indicated with a minus sign.) Print ferences Norwegian Kroner Exchange Rate U.S. Dollars Exposed net monetary liability position at January 1 NKr Adjustments for changes in net monetary position during 20X5 Increases From operations Sales NKr Decreases From operations Purchases Operating expenses From dividends Net monetary asset position prior to remeasurement at year-end rates Exposed net monetary asset postion at December 31 NK Remeasurement loss