On January 1,2014 , Prince Corporation acquired 70% of the 100,000 outstanding voting shares of Song Limited for a cash consideration of $1,015,000. On that date, shares of Song Limited were trading for $14.00 per share on the national stock exchange. The shareholders' equity of Song Limited on the acquisition date consisted of common shares with a carrying value of $710,000, contributed surplus of $110,000 and retained earnings of $320,000. All the assets and liabilities of Song were fairly valued on its balance sheet except that capital assets were undervalued by $120,000 and long-term debt with a book value of $210,000 had a fair value of $160,000. The capital assets had a remaining useful life of six years and the long-term debt matured on December 31, 2018. Prince Corporation accounts for its investment in Song Limited using the cost method and values the non-controlling interest in Song Limited at its fair value as determined from the market value of its shares on the acquisition date. The Financial statements of the two companies for the year ended December 31, 2016 appear on the next page. Additional information: - Goodwill impairment tests are carried out annually. During 2014, goodwill impairment was determined to be $26,000 on the parent's share of goodwill and $5,000 on the NCl share. In 2016, impairment in the amounts of $35,000 and $6,000 respectively was found to have occurred. - Song Company declared its 2016 dividends on December 15, 2016, with payment to be made on January 15, 2017. - During 2016, Prince charged rental fees of $30,000 to Song. Prince estimated that its cost to provide the rental services to Song was $20,000 for the year. At December 31, 2016, Song owed Prince $7,500 for the last quarter's rental services. - Ignore income taxes on the allocation and amortization of the acquisition differential. Additional information: - Goodwill impairment tests are carried out annually. During 2014, goodwill impairment was determined to be $26,000 on the parent's share of goodwill and $5,000 on the NCI share. In 2016 , impairment in the amounts of $35,000 and $6,000 respectively was found to have occurred. - Song Company declared its 2016 dividends on December 15, 2016, with payment to be made on January 15, 2017. - During 2016, Prince charged rental fees of $30,000 to Song. Prince estimated that its cost to provide the rental services to Song was $20,000 for the year. At December 31, 2016, Song owed Prince $7,500 for the last quarter's rental services. - Ignore income taxes on the allocation and amortization of the acquisition differential. SLATBMENTS ON INCDMENVDIEINEDENENNGS forthe year ended necember 31,2016 Required: Prepare the consolidated financial statements of Prince Corporation and its subsidiary for the year ended December 31, 2016