Fores Construction Company reported a pretax operating loss of $210 million for financial reporting purposes in 2016. 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 2016 and (b) an estimated loss of 10 million from accruing a loss contingency. The loss will be tax deductible when paid in 2017.

The enacted tax rate is 40%. There were no temporary differences at the beginning of the year and none originating in 2016 other than those described above. Taxable income in Foress two previous years of operation was as follows:

2014 $115 million

2015 40 million

1. Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2016. Fores elects the carryback option. (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).) Answer is complete but not entirely correct. No Event General Journal Debit Credit Receivable-Income tax refund Deferred tax asset Income tax benefit 76yx 2. What is the net operating loss reported in 2016 income statement? (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Answer is complete but not entirely correct. Net operating loss $ 210yx million 3. Prepare the journal entry to record income taxes in 2017 assuming pretax accounting income is $75 million. No additional temporary differences originate in 2017. (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).) lucation.com/hm.tpx 2/3 Check Your Work xAnswer is complete but not entirely correct. No Event General Journal Debit Credit Income tax expense 26yx Income tax payable Deferred tax asset 12. 14yx