On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $153,000. Ship's net assets on the date of acquisition were 720,000 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: Debits CreditsCash NKr 162,000 Accounts Receivable (net) 216,000 Inventory 273,000 Property, Plant & Equipment 612,000 Accumulated Depreciation NKr 153,100 Accounts Payable 98,000 Notes Payable 196,000 Common Stock 430,000 Retained Earnings 290,000 Sales 745,900 Cost of Goods Sold 415,500 Operating Expenses 123,000 Depreciation Expense 61,000 Dividends Paid 50,500 Total NKr 1,913,000 NKr 1,913,000

4 Additional Information: 1. Ship uses the FIFO method for its inventory. The beginning inventory was acquired on December 31, 20X4, and ending inventory 12.5 was acquired on December 15, 20X5. Purchases of NKr420,000 were made evenly throughout 20X5. points 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 $274,000 for 20X5, and its total stockholders' equity on January 1, 20X5, was $3,600,000. Pirate declared $200,000 of dividends during 20X5. 6. Exchange rates were as follows: Nkr $ July 1, 20X3 December 30, 20X4 1 0. 15 January 1, 20X5 0. 18 0. 18 July 1, 20X5 0. 19 December 15, 20X5 0.205 December 31, 20X5 0. 21 Average for 20X5 2. 20 Required: Prepare a schedule providing a proof of the translation adjustment. (Amounts to be deducted should be indicated with a minus sign.) X Answer is not complete. Norwegian Exchange U.S. Kroner Rate Dollars Net assets at beginning of year NKr Adjustments for changes in net assets position during 20X5 Net income Less: Dividends paid Net assets translated at: Rates during year $ 0 Rates at end of year NKr Change in other comprehensive income - translation adjustment during year $ 0 Accumulated other comprehensive income - translation adjustment - January 1 Accumulated other comprehensive income - translation adjustment - December 31 (credit) $ 0 WO. Mc raw