Piraz Inc. owns 80% of the common shares of Shiraz Ltd. and 70% of the common shares of Seleena Corp. Piraz has a debt covenant that imposes a maximum debt-to-equity ratio of two for its consolidated financial statements. If the covenant is not met, the $400 loan could be called.

Shiraz owns a property with an office building on it. The carrying value of the land and building is $50 and $200, respectively. The fair value of the land and building is $90 and $190, respectively. The building has an estimated remaining useful life of 10 years. 

Prior to this transaction, the condensed balance sheets for the three reporting entities were as follows: 

There is no undepleted acquisition differential and no unrealized profits from previous intercompany transactions. 

Required 

Prepare a memo to the management of Piraz to explain whether the proposed transaction will achieve their objective.

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Assets Liabilities Shareholder's equity • Controlling interest Noncontrolling interest . Piraz $2,670 1,785 765 120 Shiraz $ 840 570 270 Seleena $ 630 410 220