Question 4 (Mandatory) (10 points)

We discussed the case of "Twin Peaks Co. and Power Finance Co." in class. Assuming Twin Peaks decides to consolidate Power Finance as a VIE, how much of the $384 million debt needs to be consolidated into the financial statements?

Question 4 options:

A)	None of it
B)	80% of it
C)	All of it
D)	$368 million, which is calculated as $384 million $16 million Stockholders' equity

Question 5 (Mandatory) (10 points)

Which company needs to consolidate the VIE?

Question 5 options:

A)	The company with the majority ownership of the VIE
B)	The primary beneficiary of the VIE
C)	Both the company with majority ownership and the primary beneficiary
D)	Neither