On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $162,000. Ships 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 Ships property, plant, and equipment exceeded its book value by $18,000. 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 152,000 221,000 292,000 612,000 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 Total 157,000 95,000 198,000 440,000 260,000 778,000 418,000 124,000 54,000 55,000 NK1,928,000 NKr1,928,000 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. 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. Pirates income from its own operations was $243,000 for 20X5, and its total stockholders equity on January 1, 20X5, was $3,600,000. 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, 2005 December 15, 20X5 December 31, 20X5 Average
On January 1, 20X5, Pirate Company acquired all of the outstanding st
On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $162,000. Ships 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 Ships property, plant, and equipment exceeded its book value by $18,000. 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 152,000 221,000 292,000 612,000 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 Total 157,000 95,000 198,000 440,000 260,000 778,000 418,000 124,000 54,000 55,000 NK1,928,000 NKr1,928,000 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. 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. Pirates income from its own operations was $243,000 for 20X5, and its total stockholders equity on January 1, 20X5, was $3,600,000. 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, 2005 December 15, 20X5 December 31, 20X5 Average
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