FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Cash
Accounts Receivable (net)
Inventory
Property, Plant and Equipment
Cost of Goods Sold
Operating Expenses
Depreciation Expense
Dividends Paid
Total
Total Debits
Accumulated Depreciation
Accounts Payable
Notes Payable
Common Stock
Retained Earnings
Sales
Total
Total Credits
View transaction list
PIRATE INC.
Trial Balance Translation
December 31, 20X5
No
1
Date
January 01
Item
View journal entry worksheet
Investment in Ship Company
Cash
Balance
Dollars
$
$
$
$
$
b. Assume that Pirate uses the fully adjusted 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. (If no entry is required for a transaction/event, select "No Journal entry
required" In the first account field.)
82,000
23,200
105,440
8,740
219,380
219,380
12,530
1,746
35,640
78,720
46,800
146,000
321,436
321,436
General Journal
Debit
156,600
Credit
156,600
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Transcribed Image Text:Cash Accounts Receivable (net) Inventory Property, Plant and Equipment Cost of Goods Sold Operating Expenses Depreciation Expense Dividends Paid Total Total Debits Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Sales Total Total Credits View transaction list PIRATE INC. Trial Balance Translation December 31, 20X5 No 1 Date January 01 Item View journal entry worksheet Investment in Ship Company Cash Balance Dollars $ $ $ $ $ b. Assume that Pirate uses the fully adjusted 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. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account field.) 82,000 23,200 105,440 8,740 219,380 219,380 12,530 1,746 35,640 78,720 46,800 146,000 321,436 321,436 General Journal Debit 156,600 Credit 156,600
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
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
Debits
NKr 159,000
221,000
279,000
611,000
410,000
116,000
53,000
43,000
NKr1,892,000
July 1, 20X3
December 30, 20X4
January 1, 20X5
July 1, 20X5
December 15, 20X5
December 31, 20X5
Average for 20X5
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.
NKr 167,000
97,000
198,000
440,000
260,000
730,000
5. Pirate's income from its own operations was $234,000 for 20X5, and its total stockholders' equity on January 1, 20X5, was
$3,500,000. Pirate declared $130,000 of dividends during 20X5.
6. Exchange rates were as follows:
NKr
$
1 = 0.15
NKr1,892,000
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'.)
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Transcribed Image Text: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 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 Debits NKr 159,000 221,000 279,000 611,000 410,000 116,000 53,000 43,000 NKr1,892,000 July 1, 20X3 December 30, 20X4 January 1, 20X5 July 1, 20X5 December 15, 20X5 December 31, 20X5 Average for 20X5 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. NKr 167,000 97,000 198,000 440,000 260,000 730,000 5. Pirate's income from its own operations was $234,000 for 20X5, and its total stockholders' equity on January 1, 20X5, was $3,500,000. Pirate declared $130,000 of dividends during 20X5. 6. Exchange rates were as follows: NKr $ 1 = 0.15 NKr1,892,000 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'.)
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