useful On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company at a cost of $151,500. Ship's net assets on the date of acquisition were 680.000 kroner (NKI), On January 1, 2005, 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 $18,500. The remaining useful life of Ship's equipment at January 1, 2045, was 10 years. The remainder of the differential was attributable to a patent having an estimated al life of 5 years. Ship's trial balance on December 31, 20x5, in kroner, follows: Debita Credito Caah N140,000 Accounts Receivable (net) 250,000 10 71 290,000 , , & Equipment 650,000 Accumulated Depreciation NK 140,000 Accounts Payable 84.000 Notes Payable 276,000 Common Stock 440,000 Retained Earninga 240,000 Sales 740.000 Coat of Goods Sold 340,000 Operating Expenses 150,000 Depreciation Expense 55,000 Dividends Paid 45,000 Total NK 1,920,000 NK 1, 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 NK 350,000 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 2005 4. The dividends were declared and paid on July 1, 20X5 5. Pirate's income from its own operations was $250,000 for 20X5, and its total stockholders' equity on January 1, 20X5, was $3,400,000. Pirate declared $150,000 of dividends during 20X5. 6. Exchange rates were as follows: Norwegian Kroner Exchange Rate U.S. Dollars NKIT NO July 1, 20X3 December 30, 20X4 January 1, 20X5 July 1, 20X5 December 15, 2015 December 31, 20X5 Average for 20X5 NIK6 1 = 0.15 1 = 0.10 1 = 0.14 1 = 0.19 1 -0.205 Exposed na monetary lability position at January 1 Adjustments for changes in net monetary position during 20X5 Increases From operations Sales Decreases: From operations Purchases Operating penges From didende Net monetary asset position prior to remeasurement at year-end as - rates Exposed net monetary asset position at December 31 Remeasurement loss 1 = 0.21 1 = 0.20 0 Assume the U.S. dollar is the functional currency, not the krone. NK 5 0 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 Asseto Caah MKY 15,000 Accounts Receivable (net) 190,000 Monetary Liabilities Accounts Payable NEY 105,000 Notes Payable 190,000 On January 1, 20X5, the Norwegian subsidiary has a net monetary liability position of NK190,000. (Amounts to be deducted should be indicated with a minus sign.)