2 July 01 Record the dividend received from the foreign subs

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

Solution

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