Ulon is a separate legal entity that provides leasing services. It was formed with an investment of $85 million, of which $76.4 million was financed by debt, and the remainder was provided by outside equity interests. Qualitative analysis is inconclusive in determining whether Ulon is a variable interest entity. Quantitative analysis indicates that Ulon's expected future cash flows are as follows, in millions (assume a one-year time frame, with cash flows occurring at the end of the year):

Expected Cash Flows	Probability
$115.00	0.60
80.50	0.30
46.00	0.10

A risk-adjusted discount rate of 15% is appropriate. Is Ulon likely to be a variable interest entity, per U.S. GAAP?

	A.	No, because the equity interest of $8.6 million is more than expected losses of $6.5 million.
	B.	No, because the equity interest of $8.6 million is more than 10% of total financing.
	C.	Yes, because the equity interest of $8.6 million is less than expected losses of $9 million.
	D.	Yes, because the equity interest of $8.6 million is more than 10% of total assets.

Precision Company acquires all of Springfield Company's voting stock for $5,000,000 in cash. Information on Springfield's assets and liabilities at the date of acquisition is as follows:

	Book Value Dr (Cr)	Fair Value Dr (Cr)
Current assets	$ 500,000	$ 700,000
Land, buildings and equipment (net)	2,000,000	3,500,000
Liabilities	(600,000)	(550,000)
Capital stock	(500,000)
Retained earnings	(1,400,000)

In addition, Springfield Company has unrecorded identifiable intangible assets, in the form of brand names and lease agreements, with a total estimated fair value of $400,000. In eliminating entry (R) on the consolidation working paper, the debit to identifiable intangibles is:

	A.	$250,000
	B.	$350,000
	C.	$400,000
	D.	$0

Tyvo is a separate legal entity that securitizes receivables for a variety of financial institutions. It was formed with an investment of $100 million. Qualitative analysis is inconclusive regarding whether Tyvo is a variable interest entity. Quantitative analysis indicates that Tyvo's expected future cash flows are as follows, in millions (assume all cash flows occur at the end of the first year):

Expected Cash Flows	Probability
$ 84	0.40
144	0.60

A risk-adjusted discount rate of 20% is appropriate. Tyvo is likely to be considered a variable interest entity, per U.S. GAAP, if its equity financing is less than what amount?

	A.	$100 million
	B.	$12 million
	C.	$10 million
	D.	$25 million