An excerpt from the statement of financial position of Twilight Limited follows: TWILIGHT LIMITED | Selected Statement of Financial Position Information | At December 31, 2020 | Long-term debt | | | | | Notes payable, 10% | | $5,000,000 | | | 4% convertible bonds payable | | 2,000,000 | | | 6% convertible bonds payable | | 3,000,000 | | | | Total long-term debt | | $10,000,000 | | | | | | Shareholders' equity | | | | | $0.68 cumulative, no par value, convertible preferred shares (unlimited number of shares authorized, 600,000 shares issued and outstanding) | | $3,000,000 | | | Common shares, no par value (8,000,000 shares authorized, 3,000,000 shares issued and outstanding) | | 25,000,000 | | | Contributed surplus | | 200,000 | | | Retained earnings | | 7,000,000 | | | | Total shareholders equity | | $35,200,000 | | Notes and Assumptions December 31, 2020 1. | | Options were granted/written in 2019 that give the holder the right to purchase 100,000 common shares at $8 per share. The average market price of the companys common shares during 2020 was $14 per share. The options expire in 2028 and no options were exercised in 2020. | 2. | | The 4% bonds were issued in 2019 at face value. The 6% bonds were issued on June 1, 2020, at face value. Each bond has a face value of $1,000 and is convertible into 100 common shares. | 3. | | The convertible preferred shares were issued at the beginning of 2020. Each share of preferred is convertible into one common share. | 4. | | The average income tax rate is 25%. | 5. | | The common shares were outstanding during the entire year. | 6. | | Preferred dividends were not declared in 2020. | 7. | | Net income was $2,500,000 in 2020. | 8. | | No bonds or preferred shares were converted during 2020. | | | | |