Determination of whether a legal entity is a variable interestentity Assume a Legal Entity's capital structure consists of thefollowing accounts: Short-term note payable $60,000 Long-term notepayable 21,000 Mandatorily redeemable preferred stock 85,000 Commonstock 30,000 Additional paid-in capital 60,000 Retained earnings20,000 Total liabilities and equity $276,000 Note that FASB ASC 480(\"Distinguishing Liabilities from Equity\") requires mandatorilyredeemable preferred stock to be classified as a liability forfinancial reporting purposes. Unless otherwise indicated, each ofthe following parts of this question is independent: a. What is themaximum amount of expected losses that the Legal Entity can expectto sustain without being considered a variable interest entity(VIE)? $276,000 $131,000 $195,000 $110,000 b. What is the maximumamount of expected losses that the Legal Entity can expect tosustain if the lender of the long term note payable is the soleshareholder of the Legal Entity? $131,000 $276,000 $110,000$195,000 c. What is the maximum amount of expected losses that theLegal Entity can expect to sustain if the long term note payable isconvertible to common equity at the option of the holder of thenote? Why? (Note that FASB ASC 470-20 (\"Debt with Conversion andOther Features\") requires convertible debt to be classified as aliability for financial reporting purposes.) $110,000 $195,000$131,000 $276,000