On January 1, 20X8, Transport Corporation Acquired 75 Percent Interest

question 14

Multiple Choice

On January 1, 20X8, Transport Corporation acquired 75 percent interest in Steamship Company for $300,000. Steamship is a Norwegian company. The local 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. Transport 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

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Definitions:

Switch Rows Columns

A feature in spreadsheet and charting software that allows users to change the orientation of data, swapping the data in rows with data in columns.

Legend

An area on a chart or map that explains the symbols, colors, or patterns used, making the data easier to understand.

Extract Seconds

The process of isolating and retrieving only the second components from a set of time data.

SECOND(B1)

A function in spreadsheet software that returns the second component (value from 0 to 59) of a time value specified in cell B1.