Prince Inc. $($Prince$)$ purchased $90\%$ of the voting shares of Charming Company $($Charming$)$ for $$720,000$ on July $1,2020.$ On that date, Charming's common shares and retained earnings were valued at $$200,000$ and $$400,000,$ respectively. Unless otherwise stated, assume that Prince uses the cost method to account for its investment in Charming. Prince uses the fair value enterprise method to value the noncontrolling interest. Charming's fair values approximated its carrying values with the exception of the following:

Charming's bonds payable had a fair value which was $$50,000$ higher than their carrying value. The bonds payable mature on July $1,2030.$ Both companies use straight line amortization.

The financial statements of both companies for the year ended June $30,2023$ are shown below:

Income Statements

Prince Inc.

Charming Company

Sales

$$500,000$

$$400,000$

Other revenues

$100,000$

$60,000$

Less: expenses

Cost of goods sold

$400,000$

$320,000$

Depreciation$/$amortization expense

$20,000$

$10,000$

Other expenses

$60,000$

$30,000$

Income tax expense

$48,000$

$40,000$

Net income

$ $72,000$

$ $60,000$

Retained Earnings Statements

Prince Inc.

Charming Company

Balance, July $1,2022$

$$420,000$

$$240,000$

Net income

$72,000$

$60,000$

Less: dividends

$(22,000)$

$(30,000)$

Retained earnings, June $30,2023$

$ $470,000$

$ $270,000$

Balance Sheets

Prince Inc.

Charming Company

Cash

$$150,000$

$$120,000$

Accounts receivable

$350,000$

$160,000$

Inventory

$200,000$

$180,000$

Investment in Charming.

$720,000$

$---------$

Land

$40,000$

$---------$

Equipment $($net$)$

$360,000$

$240,000$

Total assets

$ $1,820,000$

$ $700,000$

Current liabilities

$$600,000$

$$130,000$

Bonds payable

$250,000$

$100,000$

Common shares

$500,000$

$200,000$

Retained earnings

$470,000$

$270,000$

Total liabilities and equity

$ $1,820,000$

$ $700,000$

Other Information:

During August of $2021,$ Prince sold $$60,000$ worth of inventory to Charming, $80\%$ of which was sold to outsiders during the year. During October of $2022,$ Prince sold inventory to Charming for $$90,000$ of which $65\%$ of this inventory was resold by Charming to outside parties in June $2023.$

$$ During September of $2021,$ Charming sold $$90,000$ worth of inventory to Prince, $50\%$ of which was sold to outsiders during the year. During April of $2023,$ Charming sold inventory to Prince for $$120,000.80\%$ of this inventory was resold by Prince to outside parties in May $2023.$

$$ During May of $2023,$ Charming sold a plot of land to Prince for $$40,000.$ The land was recorded at cost of $$24,000$ on Charming's books prior to the sale. Prince has not yet sold the land.

$$ Charming rents office space from Prince. The other expenses include rent expense of $$20,000.$

$$ The rate of gross profit on all intercompany sales is $25\%$ of sales. The effective tax rate for both companies is $40\%.$ Assume that any gain on the sale of land is fully taxable.

Required:

Compute Prince's goodwill at the date of acquisition. $7$ Marks

Prepare a schedule detailing the realized and unrealized before tax and after$-$tax profits or gains resulting from the intercompany transactions for $2023.18$ Marks

Prepare Prince's consolidated income statement for the year ended June $30,2023.$ Show the allocation of the consolidated net income between the controlling and noncontrolling interests. $10$ Marks