On January 1, 20x5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $154,800. Ship's net assets n 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 estimated useful life of 5 eqp 's trial halance on December 31 20x5, in kroner follodl ife of Ship's equipment at January 1, 20X5, was 10 years. The remainder of the differential was attributable to a patent having a ye Debits Credits Cash NKr on Accounts Receivable (net) Inventory 222.000 282.000 610,000 ant Accumulated Depreciation Accounts Payable NK: 163,000 97.000 Common Stock 430 c00 Retained Earnings 2/0,000 756,000 t of Goods Sold 417.000 Operating Expenses 118 000 62,000 Depreciation Expense NKr1,918.000 NKr1 918 000 Total 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 Chin 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 2. 5. Pirate's income from its own operations was $239.000 for 20X5, and its total stockholders' equity on January Exchan 20X5, was 3,500,000. Pirate declared $140,000 of dividends during 20X5. rat NKr 1 0.15 July 1, 20X3 20x4 January 1, 20x5 July 1, 20X5 1=0 18 1 0.19 omber 31 20x5 1 0.20 Average for 20X5 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'.) PIRATE INC. Trial Balance Translation December 31, 20X6 Balance Dollars Item Cash 32.760 Accounts Receivable (net) 46.620 Inventory Property, Plant and Equipment Cost of Goods Sold 59.220 128.100 83.400 Operating Expenses Depreciation Expense 23.600 12,000 Dividends Paid 9,690 Total 395 390 No entry necessary Total Debits Accumulatod Dopreciation 395,390 S 34.230 Accounts Payable 20.370 Notes Payable 42 420 Common Stock 48,600 Retained Earnings 151.200 Sales 163.000 Tota 459.820 Accumulated other comprehensive income translation adjustment (64,430) 395.390 Total Crodits b. Assume that Pirate uses the fully adjusted equity method. Record the journal entries, including a schedule of the translation adjustment related to the differential. (If no entry journal entries that relate t its investment in the Norwegian subsidiary during 20X5. Provide the necessary documentation and support for the amounts in required for a transactionlevent, select "No journal entry required" the first account field.) View transaction list View jounal entry worksheet General Journal No Date Debit Credit 1 Investment in Ship Company January 01 158 400 Cash 158 400 9.690 July 01 9.600 3 December 31 Income from subsidiary Other Comprehensive Income - Translation adjustment 4 December 31 5 December 31 No Transacton Recorded No Transaction Recorded 6 December 31 c. Prepare a schedule that determines Pirate's consolidated comprehensive 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 Add: Income from the Norwegian subsidiary $ 239,000 Deduct: Amortization of differential Pirate's Net Income 239,000 Add: Translation adjustment Pirate's Consolidated Comprehensive Income $ 239,000 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 $154,800. Ship's net assets n 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 estimated useful life of 5 eqp 's trial halance on December 31 20x5, in kroner follodl ife of Ship's equipment at January 1, 20X5, was 10 years. The remainder of the differential was attributable to a patent having a ye Debits Credits Cash NKr on Accounts Receivable (net) Inventory 222.000 282.000 610,000 ant Accumulated Depreciation Accounts Payable NK: 163,000 97.000 Common Stock 430 c00 Retained Earnings 2/0,000 756,000 t of Goods Sold 417.000 Operating Expenses 118 000 62,000 Depreciation Expense NKr1,918.000 NKr1 918 000 Total 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 Chin 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 2. 5. Pirate's income from its own operations was $239.000 for 20X5, and its total stockholders' equity on January Exchan 20X5, was 3,500,000. Pirate declared $140,000 of dividends during 20X5. rat NKr 1 0.15 July 1, 20X3 20x4 January 1, 20x5 July 1, 20X5 1=0 18 1 0.19 omber 31 20x5 1 0.20 Average for 20X5 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'.) PIRATE INC. Trial Balance Translation December 31, 20X6 Balance Dollars Item Cash 32.760 Accounts Receivable (net) 46.620 Inventory Property, Plant and Equipment Cost of Goods Sold 59.220 128.100 83.400 Operating Expenses Depreciation Expense 23.600 12,000 Dividends Paid 9,690 Total 395 390 No entry necessary Total Debits Accumulatod Dopreciation 395,390 S 34.230 Accounts Payable 20.370 Notes Payable 42 420 Common Stock 48,600 Retained Earnings 151.200 Sales 163.000 Tota 459.820 Accumulated other comprehensive income translation adjustment (64,430) 395.390 Total Crodits b. Assume that Pirate uses the fully adjusted equity method. Record the journal entries, including a schedule of the translation adjustment related to the differential. (If no entry journal entries that relate t its investment in the Norwegian subsidiary during 20X5. Provide the necessary documentation and support for the amounts in required for a transactionlevent, select "No journal entry required" the first account field.) View transaction list View jounal entry worksheet General Journal No Date Debit Credit 1 Investment in Ship Company January 01 158 400 Cash 158 400 9.690 July 01 9.600 3 December 31 Income from subsidiary Other Comprehensive Income - Translation adjustment 4 December 31 5 December 31 No Transacton Recorded No Transaction Recorded 6 December 31 c. Prepare a schedule that determines Pirate's consolidated comprehensive 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 Add: Income from the Norwegian subsidiary $ 239,000 Deduct: Amortization of differential Pirate's Net Income 239,000 Add: Translation adjustment Pirate's Consolidated Comprehensive Income $ 239,000 d. Compute Pirate's total consolidated stockholders' equity at December 31, 20X5. Consolidated stockholders' equity