I have already asked this question, but can't wrap my head around the experts answer. I'll add additional information to confirm.

The following were extracted from a financial report for a 2020 fiscal year (in millions of dollars): 2020 Operating assets 165 Operating liabilities 78 Financial assets 40 Financial liabilities 60 Interest income 3.6 Interest expense 5.8 Comprehensive income 12 The firm has a statutory tax rate of 35%.

(i) What was operating income (after tax) for 2020?

The solution of my professor is:

Expert answer solution from Chegg: 12 * 0.35 = 4.2 in tax of comprehensive income

5.8 * 0,35= 2.03 in tax-shield

4.2 - 2.03 = 2.17 in taxes of comprehensive income.

Answer from the expert was that my professor was wrong, and the correct answer is 9.83 million in operating income after tax.

Firstly, don't you deduct interest income from interest expense before you calculate the tax-shield of interest expenses?

Secondly, I believe comprehensive income is a summary of all sources of revenue and expenses, including taxes and interest charges. Therefore, it has already been taxed and should not be taxed again.

Lastly, operating income after tax to my knowledge is income generated by a company's core operations after deducting applicable taxes, which excludes non-operating items such as interest income and interest expense.

Is my professor correct then, or is he still wrong? My first thought was that 1.43 in interest expenses after tax were to be deducted from 12 so the answer would be 10.57.

\begin{tabular}{llr} Comprehensive income & & 12 \\ Net interest (5.83.6)= & 2.2 & \\ Tax at 35% & 0.77 & 1.43 \\ \hline Operating income after tax & & 13.43 \\ \hline \end{tabular}