III. Variable Interest Entities $(12$ points$)$

$$

Assume a Legal Entity$$s capital structure consists of the following accounts:

Short$-$term note payable

$$50,000$

Long$-$term note payable

$200,000$

Mandatorily redeemable preferred stock

$75,000$

Common stock

$20,000$

Additional paid$-$in capital

$50,000$

Retained earnings

$10,000$

Total liabilities and equity

$$405,000$

Note that FASB ASC $480($Distinguishing Liabilities from Equity$)$ requires mandatorily redeemable preferred stock to be classified as a liability for financial reporting purposes. Unless otherwise indicated, each of the following parts of this question is independent:

$1.$ What is the maximum amount of expected losses that the Legal Entity can expect to sustain without being considered a variable interest entity $($VIE$)?$