Saved Help Save & Exit Chech On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $156,600. 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 160,000 220,000 275,000 617,000 Inventory Cash Accounts Receivable (net) Property. Plant & Equipment Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Sales Sales Cost of Goods Sold Operating Expenses Depreciation Expense Dividends Paid Total NKr 164,000 92,000 207,000 440,000 260,000 757,000 420,000 122,000 59,000 47,000 NKr1,920,000 NKr1, 920,000 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 $272,000 for 20X5, and its total stockholders' equity on January 1, 20X5, was 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 $272,000 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, 20X5 December 15, 20X5 December 31, 20X5 Average for 20x5 NKT $ 1 = 0.15 1 = 0.18 1 = 0.18 1 = 0.19 1 = 0.205 1 = 0.21 1 = 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) PIRATE INC. Trial Balance Translation December 31, 20X5 Item Balance Dollars 33 600 Cash PIRATE INC. Trial Balance Translation December 31, 20X5 Item Cash Balance Dollars $ 33,600 46,200 Accounts Receivable (net) Inventory Property, Plant and Equipment Cost of Goods Sold Operating Expenses Depreciation Expense Dividends Paid 57,750 129,570 84,000 24,400 11,800 8,930 396,250 Total $ $ 396,250 34,440 $ Total Debits Accumulated Depreciation Accounts Payable Notes Payable 19,320 Common Stock Retained Earnings 43,270 79,200 46,800 151,400 374,430 Sales Total $ Total Credits $ 374,430 Journal entry worksheet Record the equity in the net income of the foreign subsidiary. Note: Enter debits before credits. Date General Journal Debit Credit December 31 Investment in Ship Company Income from subsidiary Record entry Clear entry View general journal Record the amortization of the differential. Note: Enter debits before credits. Date General Journal Debit Credit December 31 Income from subsidiary Investment in Ship Company Record entry Clear entry View general journal 1 2 3 4 5 O > Record the translation adjustment applicable to the differential. Note: Enter debits before credits. Date General Journal Debit Credit December 31 Income from subsidiary Other Comprehensive Income - Translation adjustment - Record entry Clear entry View general journal c. Prepare a schedule that determines Pirate's consolidated comprehensive income for 20X5. (Amounts to be deducted should indicated with a minus sign.) Income from Pirate's operations for 20X5, exclusive of income from the Norwegian subsidiary 4:21 Pirate's Net Income $ 0 Pirate's Consolidated Comprehensive Income $ 0 d. Compute Pirate's total consolidated stockholders' equity at December 31, 20X5. Consolidated stockholders' equity