On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Ic., a Norwegian company, at a cost of $167,400. 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: Debits Credits Cash Accounts Receivable (net) Inventory Property, Plant & Equipment Accumulated Depreciation Accounts Payable Notes Payable Common Stock 163, e00 222,000 286, e00 630, e00 NKr 161, e00 97,e00 191,e00 440, e00 260, e00 791, e00 NKr Retained Earnings Sales Cost of Goods Sold 411, e00 120, e0e 67, e00 41, e00 Operating Expenses Depreciation Expense Dividends Paid Total NKr1,940, e0e NKr1,940, e0e Addltlonal 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 $254,000 for 20X5, and its total stockholders' equity on January 1, 20X5, was $3.600,000. Pirate declared $130,000 of dividends during 20X5. 6. Exchange rates were as follows: NKr July 1, 20x3 December 30, 20x4 January 1, 2ex5 July 1, 20x5 December 15, 20x5 December 31, 20x5 Average for 20x5 = 0.15 1 = 0.18 = 0.18 = 0.19 = 0. 205 = 0.21 = 0.20 Requlred: 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 Balance Item Dollars 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 Sales Total Accumulated other comprehensive income - translation adjustment 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 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 requlred for a transaction/event, select "No journal entry requlred" In the first account fleld.) View transaction list Journal entry worksheet 2 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 mlnus sign.) 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 d. Compute Pirate's total consolidated stockholders' equity at December 31, 20X5. Consolidated stockholders' equity