On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $165,600. 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 NKr 161,000 226,000 298,000 618,000 NKr 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 168,000 106,000 197,000 430,000 270,000 782,000 422,000 113,000 64,000 51,000 NKr1,953,000 NKrl, 953,000 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 $254,000 for 20X5, and its total stockholders' equity on January 1, 20X5, was $3,600,000. 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, 2005 December 31, 2005 Average for 20x5 NKr $ 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 Total Debits Accumulated depreciation Accounts payable Notes payable Common stock Retained earnings Sales Total 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. (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 2 3 4 Record the purchase of Ship Inc. Note: Enter debits before credits. General Journal Debit Credit Date January 01 12 3 4 Record the dividend received from the foreign subsidiary. ote: Enter debits before credits. Date General Journal Debit Credit July 01