Fore Farms reported a pretax operating loss of $$260$ million for financlal reporting purposes in $2024.$ Contributing to the loss were $($a$)$ a penalty of $$8$ million assessed by the Environmental Protection Agency for violation of a federal law and pald in $2024$ and $($b$)$ an estimated loss of $$20$ million from accruing a loss contingency. The loss will be tax deductible when pald 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.

Requlred:

Prepare the journal entry to recognize the Income tax benefit of the net operating loss in $2024.$

What is the net loss reported in $2024$ income statement?

Prepare the Journal entry to record income taxes in $2025$ assuming pretax accounting income is $$270$ 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 $2024.$

Note: If no entry is required for a transaction$/$event$,$ select $"$No joumal entry required" in the first account field. Enter your answers in millions $($i$.$e$.,10,000,000$ should be entered as $10).$

Journal entry worksheet