On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $167,400. Ships net assets on the date of acquisition were 700,000 kroner (NKr). On January 1, 20X5, the book and fair values of the Norwegian subsidiarys identifiable assets and liabilities approximated their fair values except for property, plant, and equipment and patents acquired. The fair value of Ships property, plant, and equipment exceeded its book value by $18,000. The remaining useful life of Ships 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. Ships trial balance on December 31, 20X5, in kroner, follows:

	Debits			Credits
Cash	NKr	153,000
Accounts Receivable (net)		227,000
Inventory		283,000
Property, Plant & Equipment		613,000
Accumulated Depreciation				NKr	164,000
Accounts Payable					91,000
Notes Payable					196,000
Common Stock					450,000
Retained Earnings					250,000
Sales					769,000
Cost of Goods Sold		418,000
Operating Expenses		121,000
Depreciation Expense		55,000
Dividends Paid		50,000
Total	NKr	1,920,000		NKr	1,920,000

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. Ships 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. Pirates income from its own operations was $235,000 for 20X5, and its total stockholders equity on January 1, 20X5, was $3,600,000. Pirate declared $120,000 of dividends during 20X5.
6. Exchange rates were as follows:

	NKr		$
July 1, 20X3	1	=	0.15
December 30, 20X4	1	=	0.18
January 1, 20X5	1	=	0.18
July 1, 20X5	1	=	0.19
December 15, 20X5	1	=	0.205
December 31, 20X5	1	=	0.21
Average for 20X5	1	=	0.20

Required: 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'.)

b. Assume that Pirate uses the fully adjusted equity method. Record all journal entries that relate to its investment in the Norwegian subsidiary during 20X5. 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.)

c. Prepare a schedule that determines Pirates consolidated comprehensive income for 20X5. (Amounts to be deducted should be indicated with a minus sign.)

d. Compute Pirates total consolidated stockholders equity at December 31, 20X5.

Answer is complete and correct. PIRATE INC. Trial Balance Translation December 31, 20X5 Item Balance Dollars 32,130 47,670 59,430 128,730 83,600 24,200 11,000 9,500 $ 396,260 Cash Accounts Receivable (net) Inventory Property, Plant and Equipment Cost of Goods Sold Operating Expenses Depreciation Expense Dividends Paid Total No entry necessary Total Debits Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Salos Total Accumulated other comprehensive income - translation adjustment Total Credits $ 396,260 34.440 19,110 41,160 81,000 45,000 153,800 374,510 21,750 396,260 $ $ No General Journal Credit Date January 01 Debit 167.400 Investment in Ship Company Cash 167.400 July 01 Cash 9.500 Investment in Ship Company 9.500 3 December 31 Investment in Ship Company Income from subsidiary bobo bobo 6000 December 31 Investment in Ship Company Other Comprehensive Income - Translation adjustment December 31 Income from subsidiary Investment in Ship Company 6 December 31 Investment in Ship Company Other Comprehensive Income - Translation adjustment c. Prepare a schedule that determines Pirate's consolidated comprehensive income for 20X5. (Amounts to be deducted should be indicated with a minus sign.) Answer is not complete. Income from Pirate's operations for 20X5, exclusive of income from the Norwegian subsidiary Add: Income from the Norwegian subsidiary Deduct: Amortization of differential Pirate's Net Income Add: Translation adjustment Pirate's Consolidated Comprehensive Income Answer is complete and correct. PIRATE INC. Trial Balance Translation December 31, 20X5 Item Balance Dollars 32,130 47,670 59,430 128,730 83,600 24,200 11,000 9,500 $ 396,260 Cash Accounts Receivable (net) Inventory Property, Plant and Equipment Cost of Goods Sold Operating Expenses Depreciation Expense Dividends Paid Total No entry necessary Total Debits Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Salos Total Accumulated other comprehensive income - translation adjustment Total Credits $ 396,260 34.440 19,110 41,160 81,000 45,000 153,800 374,510 21,750 396,260 $ $ No General Journal Credit Date January 01 Debit 167.400 Investment in Ship Company Cash 167.400 July 01 Cash 9.500 Investment in Ship Company 9.500 3 December 31 Investment in Ship Company Income from subsidiary bobo bobo 6000 December 31 Investment in Ship Company Other Comprehensive Income - Translation adjustment December 31 Income from subsidiary Investment in Ship Company 6 December 31 Investment in Ship Company Other Comprehensive Income - Translation adjustment c. Prepare a schedule that determines Pirate's consolidated comprehensive income for 20X5. (Amounts to be deducted should be indicated with a minus sign.) Answer is not complete. Income from Pirate's operations for 20X5, exclusive of income from the Norwegian subsidiary Add: Income from the Norwegian subsidiary Deduct: Amortization of differential Pirate's Net Income Add: Translation adjustment Pirate's Consolidated Comprehensive Income