On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $162,000. Ship's net assets on the date of acquisition were 700,000 kroner (NKr). On January 1, 2005, 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: Credits Debits NK 162,000 208,000 283,000 619,000 NKT Cash Accounts Receivable (net) Inventory Property, Plant & Equipment Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Sales Cost of Goods Sold Operating Expenses Depreciation Expense Dividends Paid Total 151,000 91,000 193,000 430,000 270,000 784,000 425,000 119,000 58,000 45,000 Nkr1,919,000 NKr1,919,000 Additional Information: 1. Ship uses the FIFO method for its inventory. The beginning inve 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 $271,000 for 20X5, and its total stockholders' equity on January 1, 20X5, was $3,500,000. Pirate declared $160,000 of dividends during 20X5. 6. Exchange rates were as follows: July 1, 20X3 December 30, 20X4 January 1, 20x5 July 1, 2005 December 15, 20X5 December 31, 20x5 Average for 20x5 NKT $ 1 = 0.15 1 = 0.18 1 = 0.18 1 = 0.19 1 = 0.205 1 = 0.21 1 = 0.20 Assume the U.S. dollar is the functional currency, not the krone. Required: a. Prepare a schedule remeasuring the trial balance from Norwegian kroner into U.S. dollars. (If no adjustment is needed, select 'no entry necessary!) U.S. dollars Cash Accounts receivable (net) Inventory Property, plant, and equipment Cost of goods sold Operating expenses Depreciation expense Dividends paid Total $ 0 $ 0 Total Debits Accumulated depreciation Accounts payable Notes payable Common stock Retained earnings Sales Total $ 0 Total credits $ 0 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. (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 1 2 3 4. > Record the purchase of Ship Inc. Note: Enter debits before credits. General Journal Debit Credit Date January 01 Record entry Clear entry View general journal 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. (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 Record the dividend received from the foreign subsidiary. Note: Enter debits before credits. Date General Journal Debit Credit July 01 Record entry Clear entry View general journal View transaction list Journal entry worksheet Record the equity in the net income of the foreign subsidiary. Note: Enter debits before credits. General Journal Debit Credit Date December 31 Record entry Clear entry View general journal View transaction list Journal entry worksheet 1 2 3 3 > N Record the amortization of the differential. Note: Enter debits before credits. General Journal Debit Credit Date December 31 Record entry Clear entry View general journal c. Prepare a schedule that determines Pirate's consolidated net 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 Consolidated net income for 20X5 0 d. Compute total consolidated stockholders' equity at December 31, 20X5. Total consolidated stockholders' equity