On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $151,400. Ships net assets on the date of acquisition were 660,000 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 Ships property, plant, and equipment exceeded its book value by $18,400. The remaining useful life of Ships 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. Ships trial balance on December 31, 20X5, in kroner, follows: Credits Debits NKr 130,000 240,000 280,000 640,000 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 130,000 83,000 255,000 430,000 230,000 730,000 330,000 140,000 54,000 44,000 NKr1,858,000 Total NKr1,858,000 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 NKr340,000 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. Ships 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 $245,000 for 20X5, and its total stockholders' equity on January 1, 20X5, was $3,300,000. Pirate declared $140,000 of dividends during 20X5. 6. Exchange rates were as follows: July 1, 20X3 December 30, 20X4 January 1, 2005 July 1, 2005 December 15, 2005 December 31, 20X5 Average for 2005 NK $ 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: Prepare a schedule providing a proof of the remeasurement gain or loss. For this part of the problem, assume that the Norwegian subsidiary had the following monetary assets and liabilities at January 1, 20X5: Monetary Assets Cash Accounts Receivable (net) Nkr 14,000 180,000 Monetary Liabilities Accounts Payable NKr100,000 Notes Payable 180,000 On January 1, 20X5, the Norwegian subsidiary has a net monetary liability position of NKr86,000. (Amounts to be deducted should be indicated with a minus sign.) Norwegian Kroner Exchange Rate U.S. Dollars NKT Exposed net monetary liability position at January 1 Adjustments for changes in net monetary position during 20X5: Increases: From operations: NK | Sales Decreases: From operations: Purchases Operating expenses From dividends Net monetary asset position prior to remeasurement at year-end rates Exposed net monetary asset position at December 31 NKT 01 Remeasurement loss