John Thronen is an analyst in the research department of an international securities firm. He is preparing a research report on Topmaker, Inc., a publicly traded company that complies with IFRS. On 1 January 2018, Topmaker invested $11 million in Blanca Co. debt securities (with a 5.0% stated coupon on par value, and interest payable each 31 December). The par value of the securities is $10 million, and the market interest rate in effect when the bonds were purchased was 4.0%. Topmaker designates the investment as amortized cost. As of 31 December 2018, the fair value of the securities is $12 million. Blanca Co. wants to raise $40 million in capital by borrowing against its financial receivables. Blanca plans to create a special-purpose entity (SPE), invest $10 million in the SPE, have the SPE borrow $40 million, and then use the funds to purchase $50 million of receivables from Blanca. Blanca meets the definition of control and plans to consolidate the SPE. Blancas balance sheet is presented in Exhibit 1. Exhibit 1 Blanca Co. Balance Sheet at 31 December 2018 ($ millions) Cash 20 Current liabilities 25 Accounts receivable 50 Noncurrent liabilities 30 Other assets 30 Shareholders equity 45 Total assets 100 Total liabilities and equity 100 Also on 1 January 2018, Topmaker acquired a 15% equity interest with voting power in Rainer Co. for $300 million. Topmaker has representation on Rainers board of directors and participates in Rainers policymaking process. Thronen believes that Topmaker underestimated the goodwill and balance sheet value of its investment account in Rainer. To estimate these figures, Thronen gathers selected financial information for Rainer as of 31 December 2018 in Exhibit 2. The plant and equipment are depreciated on a straight-line basis and have 10 years of remaining life