Fore Farms reported a pretax operating loss of $150 million for financial reporting purposes in 2021. Contributing
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Question:
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 of the year and none originating in 2021 other than those described above.
Question: Prepare the journal entry to record income taxes in 2022 assuming pretax accounting income is $175 million. No additional temporary differences originate in 2022.
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