Translation, Journal Entries, Consolidated Comprehensive Income, and Stockholders Equity On January 1, 20X5, Taft Company acquired all of the outstanding stock of Vikix, Inc., a Norwegian company, at a cost of $151,200. Vikixs net assets on the date of acquisition were 700,000 kroner (NKr). On January 1, 20X5, the book and fair values of the Norwegian subsidiarys identifiable assets and liabilities approximated their fair values except for property, plant, and equipment and patents acquired. The fair value of Vikixs property, plant, and equipment exceeded its book value by $18,000. The remaining useful life of Vikixs equipment at January 1, 20X5 was 10 years. E12-15* Problems P12-16 P12-17 Chapter 12 Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements 623 The remainder of the differential was attributable to a patent having an estimated useful life of 5 years. Vikixs trial balance on December 31, 20X5, in kroner, follows: Debits Credits Cash NKr 150,000 Accounts Receivable (net) 200,000 Inventory 270,000 Property, Plant, and Equipment 600,000 Accumulated Depreciation NKr 150,000 Accounts Payable 90,000 Notes Payable 190,000 Common Stock 450,000 Retained Earnings 250,000 Sales 690,000 Cost of Goods Sold 410,000 Operating Expenses 100,000 Depreciation Expense 50,000 Dividends Paid 40,000 Total NKr1,820,000 NKr1,820,000 Additional Information 1. Vikix 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 NKr420,000 were made evenly throughout 20X5. 2. Vikix acquired all of its property, plant, and equipment on July 1, 20X3, and uses straight-line depreciation. 3. Vikixs 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. Tafts income from its own operations was $275,000 for 20X5, and its total stockholders equity on January 1, 20X5, was $3,500,000. Taft declared $100,000 of dividends during 20X5. 6. Exchange rates were as follows: July 1, 20X3 NKr1 $.15 December 30, 20X4 NKr1 $.18 January 1, 20X5 NKr1 $.18 July 1, 20X5 NKr1 $.19 December 15, 20X5 NKr1 $.205 December 31, 20X5 NKr1 $.21 Average for 20X5 NKr1 $.20 Required a. Prepare a schedule translating the trial balance from Norwegian kroner into U.S. dollars. Assume the kroner is the functional currency. b. Assume that Taft uses the basic 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, including a schedule of the translation adjustment related to the differential. c. Prepare a schedule that determines Tafts consolidated comprehensive income for 20X5. d. Compute Tafts total consolidated stockholders equity at December 31, 20X5