On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $163,800. 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 itebook 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 Debita NK 260,000 221,000 284,000 624,000 Cash Accounts Receivable (net) Inventory Property. Plant & Equipment Accumulated Depreciation Accounts Payable Notes Payable Comon Stock Retained Earnings Balas Coat of Goods sold Operating Expenses Depreciation expense Dividends Paid Total Nr 151,000 107,000 202,000 430,000 270,000 773,000 422,000 123,000 59.000 40.000 NK 1,933,000 NKT1.933,000 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. 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 $257,000 for 20x5, and its total stockholders' equity on January 1, 20x5, was $3,500,000. Pirate declared $120,000 of dividends during 20x5. 6. Exchange rates were as follows: July 1, 20X3 December 30, 20X4 January 1, 2045 July 1, 20x5 December 15, 2005 December 31, 20X5 Average for 20x5 NKE 6 1- 0.15 10.10 10.10 1 - 0.19 1 0.205 -0.21 1 -0.20 nequitu . 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') 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 Pald 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 2035. 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 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 c. Prepare a schedule that determines Pirate's consolidated comprehensive income for 20x5. (Amounts to be deducted should be indicated with a minus sign.) Income from Pirate's operations for 20X5. exclusive of income from the Norwegian subsidiary Pirate's Net Income Pirate's Consolidated Comprehensive Income d. Compute Pirate's total consolidated stockholders' equity at December 31, 20X5. Consolidated stockholders' equity
