Fore Farms reported a pretax operating loss of $137 million for financial reporting purposes in 2024. 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 2024 and (b) an estimated loss of \$12 million from accruing a loss contingency. The loss will be tax deductible when paid in 2025. The enacted tax rate is 25\%. There were no temporary differences at the beginning of the year and none originating in 2024 other than those described above. Taxable income in Fores's two previous years of operation was as follows: Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2024. Assume Fore will carry back its NOL to prior years. 2. What is the net operating loss reported in 2024 income statement? 3. Prepare the journal entry to record income taxes in 2025 assuming pretax accounting income is $160 million. No additional temporary differences originate in 2025. Complete this question by entering your answers in the tabs below. Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2024. Assume Fore will carry back its NOL to prior years. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10 ). Fore Farms reported a pretax operating loss of $137 million for financial reporting purposes in 2024. Contributing to the loss were (a) a penalty of $5 mililion assessed by the Environmental Protection Agency for violation of a federal law and paid in 2024 and (b) an estimated loss of $12 million from accruing a loss contingency. The loss will be tax deductible when paid in 2025. The enacted tax rate is 25%. There were no temporary differences at the beginning of the year and none originating in 2024 other than those described above. Taxable income in Fores's two previous years of operation was as follows: 20222023$80mililion$32million Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2024. Assume Fore will carry back its NOL to prior years. 2. What is the net operating loss reported in 2024 income statement? 3. Prepare the journal entry to record income taxes in 2025 assuming pretax accounting income is $160 million. No additional temporary differences originate in 2025. Complete this question by entering your answers in the tabs below. Prepare the journal entry to record income taxes in 2025 assuming pretax accounting income is $160 million. No additional temporary differences originate in 2025 . Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10)
