In a study, researchers asked participants two questions:

1) Assume you had been exposed to a disease which if contracted leads to a quick and painless death within a week. The probability you have the disease is 0.001. What is the maximum you would be willing to pay for a cure?

2) Suppose volunteers were needed for research on the above disease. All that would be required is that you expose yourself to a 0.001 chance of contracting the disease. What is the minimum payment you would require to volunteer for this program?

Based on what you have learned from the behavioral economics course so far, you would predict:

a) On average, the payment amount answered in 1) would be the same as the amount in 2).

b) On average, the payment amount answered in 1) would be higher than the amount given in 2).

c) On average, the payment amount answered in 1) would be lower than the amount given in 2).

Poco Company purchased 85% of the outstanding common stock of Serena Company on December 31, 2014, for $310,000 cash. On that date, Serena Company's stockholders' equity consisted of the following: Common stock Other contributed capital Retained earnings $240,000 55,000 50,000 $345,000 During 2017, Serena Company distributed a dividend in the amount of $12,000 and at year-end reported a net loss of $10,000. During the time that Poco Company has held its investment in Serena Company, Serena Company's retained earnings balance has decreased $29,500 to a net balance of $20,500 after closing on December 31, 2017. Serena Company did not declare or distribute any dividends in 2015 or 2016. The difference between book value and the value implied by the purchase price relates to goodwill. Required: A. Assume that Poco Company uses the equity method. Prepare in general journal form the entries needed in the preparation of a consolidated statements workpaper on December 31, 2017. Explain why the partial and com plete equity methods would result in the same entries in this instance. B. Assume that Poco Company uses the cost method. Prepare in general journal form the entries needed in the prepa ration of a consolidated statements workpaper on December 31, 2017.