Question
In: Accounting
Fore Farms reported a pretax operating loss of $137 million for financial reporting purposes in 2021....
Fore Farms reported a pretax operating loss of $137 million for
financial reporting purposes in 2021. Contributing to the loss were
(a) a penalty of $5 million assessed by the Environmental
Protection Agency for violation of a federal law and paid in 2021
and (b) an estimated loss of $12 million from accruing a loss
contingency. The loss will be tax deductible when paid in
2022.
The enacted tax rate is 25%. There were no temporary differences at
the beginning of the year and none originating in 2021 other than
those described above.
Required:
1. Prepare the journal entry to recognize the
income tax benefit of the net operating loss in 2021.
2. What is the net operating loss reported in 2021
income statement?
3. Prepare the journal entry to record income
taxes in 2022 assuming pretax accounting income is $160 million. No
additional temporary differences originate in 2022.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Fore Farms reported a pretax operating loss of $220 million for financial reporting purposes in 2021....
Fore Farms reported a pretax operating loss of $220 million for
financial reporting purposes in 2021. Contributing to the loss were
(a) a penalty of $16 million assessed by the Environmental
Protection Agency for violation of a federal law and paid in 2021
and (b) an estimated loss of $30 million from accruing a loss
contingency. The loss will be tax deductible when paid in
2022.
The enacted tax rate is 25%. There were no temporary differences at
the beginning...
Fore Farms reported a pretax operating loss of $140 million for financial reporting purposes in 2021....
Fore Farms reported a pretax operating loss of $140 million for
financial reporting purposes in 2021. Contributing to the loss were
(a) a penalty of $12 million assessed by the Environmental
Protection Agency for violation of a federal law and paid in 2021
and (b) an estimated loss of $10 million from accruing a loss
contingency. The loss will be tax deductible when paid in 2022. The
enacted tax rate is 25%. There were no temporary differences at the
beginning...
Fore Farms reported a pretax operating loss of $220 million for financial reporting purposes in 2021....
Fore Farms reported a pretax operating loss of $220 million for
financial reporting purposes in 2021. Contributing to the loss were
(a) a penalty of $16 million assessed by the Environmental
Protection Agency for violation of a federal law and paid in 2021
and (b) an estimated loss of $30 million from accruing a loss
contingency. The loss will be tax deductible when paid in
2022.
The enacted tax rate is 25%. There were no temporary differences at
the beginning...
Fore Farms reported a pretax operating loss of $240 million for financial reporting purposes in 2021....
Fore Farms reported a pretax operating loss of $240 million for
financial reporting purposes in 2021. Contributing to the loss were
(a) a penalty of $16 million assessed by the Environmental
Protection Agency for violation of a federal law and paid in 2021
and (b) an estimated loss of $30 million from accruing a loss
contingency. The loss will be tax deductible when paid in
2022.
The enacted tax rate is 25%. There were no temporary differences at
the beginning...
Fore Farms reported a pretax operating loss of $150 million for financial reporting purposes in 2021....
Fore Farms reported a pretax operating loss of $150 million for
financial reporting purposes in 2021. Contributing to the loss were
(a) a penalty of $6 million assessed by the Environmental
Protection Agency for violation of a federal law and paid in 2021
and (b) an estimated loss of $10 million from accruing a loss
contingency. The loss will be tax deductible when paid in 2022. The
enacted tax rate is 25%. There were no temporary differences at the
beginning...
Fore Farms reported a pretax operating loss of $210 million for financial reporting purposes in 2021....
Fore Farms reported a pretax operating loss of $210 million for
financial reporting purposes in 2021. Contributing to the loss were
(a) a penalty of $10 million assessed by the Environmental
Protection Agency for violation of a federal law and paid in 2021
and (b) an estimated loss of $20 million from accruing a loss
contingency. The loss will be tax deductible when paid in
2022.
The enacted tax rate is 25%. There were no temporary differences at
the beginning...
Fores Construction Company reported a pretax operating loss of $210 million for financial reporting purposes in...
Fores Construction Company reported a pretax operating loss of
$210 million for financial reporting purposes in 2018. Contributing
to the loss were (a) a penalty of $10 million assessed by the
Environmental Protection Agency for violation of a federal law and
paid in 2018 and (b) an estimated loss of $10 million from accruing
a loss contingency. The loss will be tax deductible when paid in
2019. The enacted tax rate is 40%. There were no temporary
differences at the...
Fores Construction Company reported a pretax operating loss of $240 million for financial reporting purposes in...
Fores Construction Company reported a pretax operating loss of
$240 million for financial reporting purposes in 2018. Contributing
to the loss were (a) a penalty of $15 million assessed by the
Environmental Protection Agency for violation of a federal law and
paid in 2018 and (b) an estimated loss of $20 million from accruing
a loss contingency. The loss will be tax deductible when paid in
2019.
The enacted tax rate is 40%. There were no temporary differences at
the...
Fores Construction Company reported a pretax operating loss of $250 million for financial reporting purposes in...
Fores Construction Company reported a pretax operating loss of
$250 million for financial reporting purposes in 2018. Contributing
to the loss were (a) a penalty of $15 million assessed by the
Environmental Protection Agency for violation of a federal law and
paid in 2018 and (b) an estimated loss of $10 million from accruing
a loss contingency. The loss will be tax deductible when paid in
2019. The enacted tax rate is 40%. There were no temporary
differences at the...
Fores Construction Company reported a pretax operating loss of $260 million for financial reporting purposes in...
Fores Construction Company reported a pretax operating loss of
$260 million for financial reporting purposes in 2018. Contributing
to the loss were (a) a penalty of $15 million assessed by the
Environmental Protection Agency for violation of a federal law and
paid in 2018 and (b) an estimated loss of $20 million from accruing
a loss contingency. The loss will be tax deductible when paid in
2019.
The enacted tax rate is 40%. There were no temporary differences at
the...
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