Part I (10 Marks) The following is a comparative balance sheet for a firm for fiscal year 2020 (in millions of dollars): 2022 2021 2022 2021 60 50 Accounts payable 1,200 1,040 Operating cash Short-term investments (at market) 550 500 Accrued liabilities 390 450 Accounts receivable 940 790 Long-term debt 1,840 1,970 Inventory 910 840 Property and plant 2,840 2.710 Common equity 1,870 1.430 5.300 4.890 5.300 4.890 The following is the statement of common shareholders' equity for 2022 (in millions of dollars): Balance, end of fiscal year 2021 1,430 810 Share issues from exercised employee stock options Repurchase of 24 million shares (720) Cash dividend (180) Tax benefit from exercise of employee stock options 12 Unrealized gain on investments 50 Net income 468 Balance, end of fiscal year 2022 1,870 The firm's income tax rate is 35%. The firm reported $15 million in interest income and $98 million in interest expense for 2022. Sales revenue was $3,726 million. a. Calculate the loss to shareholders from the exercise of employee stock options during 2022. (2 Marks) b. The shares repurchased were in settlement of a forward purchase agreement. The market price of the shares at the time of the repurchase was $25 each. What was the effect of this transaction on the income for the shareholders? (3 Marks) C. Prepare a comprehensive income statement that distinguishes after-tax operating income from financing income and expense. Include gains or losses from the transactions in questions (a) and (b) above. Part I (10 Marks) The following is a comparative balance sheet for a firm for fiscal year 2020 (in millions of dollars): 2022 2021 2022 2021 60 50 Accounts payable 1,200 1,040 Operating cash Short-term investments (at market) 550 500 Accrued liabilities 390 450 Accounts receivable 940 790 Long-term debt 1,840 1,970 Inventory 910 840 Property and plant 2,840 2.710 Common equity 1,870 1.430 5.300 4.890 5.300 4.890 The following is the statement of common shareholders' equity for 2022 (in millions of dollars): Balance, end of fiscal year 2021 1,430 810 Share issues from exercised employee stock options Repurchase of 24 million shares (720) Cash dividend (180) Tax benefit from exercise of employee stock options 12 Unrealized gain on investments 50 Net income 468 Balance, end of fiscal year 2022 1,870 The firm's income tax rate is 35%. The firm reported $15 million in interest income and $98 million in interest expense for 2022. Sales revenue was $3,726 million. a. Calculate the loss to shareholders from the exercise of employee stock options during 2022. (2 Marks) b. The shares repurchased were in settlement of a forward purchase agreement. The market price of the shares at the time of the repurchase was $25 each. What was the effect of this transaction on the income for the shareholders? (3 Marks) C. Prepare a comprehensive income statement that distinguishes after-tax operating income from financing income and expense. Include gains or losses from the transactions in questions (a) and (b) above
