On January 1,20X8,Pullman Corporation acquired 75 percent interest in Steamship Company for $300,000.Steamship is a Norwegian company.The recording currency is the Norwegian kroner (NKr).The acquisition resulted in an excess of cost-over-book value of $25,000 due solely to a patent having a remaining life of 5 years.Pullman uses the fully adjusted equity method to account for its investment.Steamship's December 31,20X8,trial balance has been translated into U.S.dollars,requiring a translation adjustment debit of $8,000.Steamship's net income translated into U.S.dollars is $35,000.It declared and paid an NKr 20,000 dividend on June 1,20X8.Relevant exchange rates are as follows:
Assume the kroner is the functional currency.
-Based on the preceding information,in the journal entry to record the amortization of the patent for 20X8 on the parent's books,Investment in Steamship Company will be debited for:
A)$5,000
B)$5,500
C)$4,500
D)$3,000

Question

On January 1,20X8,Pullman Corporation acquired 75 percent interest in Steamship Company for $300,000.Steamship is a Norwegian company.The recording currency is the Norwegian kroner (NKr).The acquisition resulted in an excess of cost-over-book value of $25,000 due solely to a patent having a remaining life of 5 years.Pullman uses the fully adjusted equity method to account for its investment.Steamship's December 31,20X8,trial balance has been translated into U.S.dollars,requiring a translation adjustment debit of $8,000.Steamship's net income translated into U.S.dollars is $35,000.It declared and paid an NKr 20,000 dividend on June 1,20X8.Relevant exchange rates are as follows:
  Assume the kroner is the functional currency.
-Based on the preceding information,in the journal entry to record the amortization of the patent for 20X8 on the parent's books,Investment in Steamship Company will be debited for:
A)$5,000 
B)$5,500 
C)$4,500 
D)$3,000

Quizplus · Accepted Answer

The Answer of On January 1,20X8,Pullman Corporation acquired 75 percent interest in Steamship Company for $300,000.Steamship is a Norwegian company.The recording currency is the Norwegian kroner (NKr).The acquisition resulted in an excess of cost-over-book value of $25,000 due solely to a patent having a remaining life of 5 years.Pullman uses the fully adjusted equity method to account for its investment.Steamship's December 31,20X8,trial balance has been translated into U.S.dollars,requiring a translation adjustment debit of $8,000.Steamship's net income translated into U.S.dollars is $35,000.It declared and paid an NKr 20,000 dividend on June 1,20X8.Relevant exchange rates are as follows:
  Assume the kroner is the functional currency.
-Based on the preceding information,in the journal entry to record the amortization of the patent for 20X8 on the parent's books,Investment in Steamship Company will be debited for:
A)$5,000 
B)$5,500 
C)$4,500 
D)$3,000

On January 1,20X8,Pullman Corporation Acquired 75 Percent Interest in Steamship