On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., 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: Credits Debits 162,000 220,000 288,000 603,000 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 NKr 170,000 92,000 197,000 460,000 240,000 743,000 411,000 120,000 53,000 45,000 NKr1,902,000 NKr1,902,000 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 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 $264,000 for 20X5, and its total stockholders' equity on January 1, 20X5, was $3,500,000. Pirate declared $140,000 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 NK 1 1 1 1 1 1 i $ = 0.15 = 0.18 = 0.18 = 0.19 = 0.205 = 0.21 = 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'.) Answer is not complete. PIRATE INC. Trial Balance Translation December 31, 20X5 Item Cash Accounts Receivable (net) Inventory Property, Plant and Equipment Cost of Goods Sold Operating Expenses Depreciation Expense Dividends Paid Total Balance Dollars $ 34,020 46,200 60,480 126,630 82,200 24,000 10,600 8,550 $ 392,680 0 $ 392,680 $ 35,700 19,320 41,370 82,800 43,200 148,600 $ 370,990 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 $ 370,990 c. Prepare a schedule that determines Pirate's consolidated comprehensive income for 20X5. (Ar 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 $ 0 $ 0 1 d. Compute Pirate's total consolidated stockholders' equity at December 31, 20X5. Consolidated stockholders' equity On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., 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: Credits Debits 162,000 220,000 288,000 603,000 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 NKr 170,000 92,000 197,000 460,000 240,000 743,000 411,000 120,000 53,000 45,000 NKr1,902,000 NKr1,902,000 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 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 $264,000 for 20X5, and its total stockholders' equity on January 1, 20X5, was $3,500,000. Pirate declared $140,000 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 NK 1 1 1 1 1 1 i $ = 0.15 = 0.18 = 0.18 = 0.19 = 0.205 = 0.21 = 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'.) Answer is not complete. PIRATE INC. Trial Balance Translation December 31, 20X5 Item Cash Accounts Receivable (net) Inventory Property, Plant and Equipment Cost of Goods Sold Operating Expenses Depreciation Expense Dividends Paid Total Balance Dollars $ 34,020 46,200 60,480 126,630 82,200 24,000 10,600 8,550 $ 392,680 0 $ 392,680 $ 35,700 19,320 41,370 82,800 43,200 148,600 $ 370,990 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 $ 370,990 c. Prepare a schedule that determines Pirate's consolidated comprehensive income for 20X5. (Ar 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 $ 0 $ 0 1 d. Compute Pirate's total consolidated stockholders' equity at December 31, 20X5. Consolidated stockholders' equity