On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $153,000. 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	NKr	155,000
Accounts Receivable (net)		226,000
Inventory		291,000
Property, Plant & Equipment		610,000
Accumulated Depreciation				NKr	151,000
Accounts Payable					94,000
Notes Payable					198,000
Common Stock					450,000
Retained Earnings					250,000
Sales					779,000
Cost of Goods Sold		412,000
Operating Expenses		118,000
Depreciation Expense		65,000
Dividends Paid		45,000
Total	NKr	1,922,000		NKr	1,922,000

Additional Information:

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.

Ship acquired all of its property, plant, and equipment on July 1, 20X3, and uses straight-line depreciation.

Ships sales were made evenly throughout 20X5, and its operating expenses were incurred evenly throughout 20X5.

The dividends were declared and paid on July 1, 20X5.

Pirate's income from its own operations was $247,000 for 20X5, and its total stockholders' equity on January 1, 20X5, was $3,500,000. Pirate declared $180,000 of dividends during 20X5.

Exchange rates were as follows:

	NKr		$
July 1, 20X3	1	=	0.15
December 30, 20X4	1	=	0.18
January 1, 20X5	1	=	0.18
July 1, 20X5	1	=	0.19
December 15, 20X5	1	=	0.205
December 31, 20X5	1	=	0.21
Average for 20X5	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'.)

	US Dollars
cash
Account 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.) 1. Record the purchase of ship inc.

2. record the dividend received from the foreign subsidiary

3. record the equity in the net income of the foreign subsidiary

4. record the amortization of the differential 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 operation for 20x5, exclusive of income from the Norwegian subsidiary
consolidated net income for 20x5

d. Compute Pirate's total consolidated stockholders' equity at December 31, 20X5.

total consolidated stockholders' equity