On January 1, 20X5, 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 700,000 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 $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: Cash Accounts Receivable (net) Inventory Property, Plant and Equipment Accumulated Depreciation Accounts Payable Notes Payable Connon Stock Retained Earnings Sales Cost of Goods Sold Operating Expenses Depreciation Expense Dividends Paid Total Additional Information: Debits NKr 154,000 221,000 Credits 283,000 607,000 NKr 156,000 107,000 201,000 440,000 260,000 757,000 420,000 123,000 67,000 46,000 NKr 1,921,000 NKr 1,921,000 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 NKr430,000 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 $226,000 for 20X5, and its total stockholders' equity on January 1, 20X5, was $3,500,000. Pirate declared $200,000 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 NKr 1 = $ 0.15 NKr 1 = $ 0.18 NKr 1 = $ 0.18 NKr 1$ 0.19 NKr 1 = $ 0.205 NKr 1$ 0.21 NKr 1 $ 0.20