2. July 01 Record the dividend received from the foreign subsidiary. 3. December

Question

2. July 01 Record the dividend received from the foreign subsidiary.

3. December 31 Record the equity in the net income of the foreign subsidiary.

4. December 31 Record the amortization of the differential.

On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $167,400 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 Norwegiarn 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: Debits Credits NKr 160,000 218,000 277,000 609,000 Cash Accounts Receivable (net) Inventory Property, Plant & Equipment Accumulated Depreciatiorn Accounts Payable Notes Payable Common Stock Retained Earnings Sales Cost of Goods Sold Operating Expenses Depreciation Expense Dividends Paid Total NKr 167,000 91,000 209,000 430,000 270,000 745,000 421,000 125,000 61,000 41,000 NKr1,912,000 NKr1,912,000

Explanation / Answer

Total

Cash 32,000 Accounts Receivable 43,600 Inventory 55,400 Property, plant, & machinery 121,800 Cost of Goods Sold 84,200 Operating expenses 25,000 Depreciation Expense 12,200 Dividends Paid 8,200 Total 382,400 Total Debits 382,400 Accumulated Depreciation 33,400 Accounts Payable 18,200 Notes Payable 41,800 Common Stock 86,000 Retained Earnings 54,000 Sales 149,000

Total

382,400

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