Please Explain Proper Step by Step and Do Not Give Solution In Image Format And Fast Answering Please Thanks In Advance ? Fore Farms reported a pretax operatingloss of $200 million for financialreporting purposes in 2024.Contributing to the loss were (a) apenalty of $8 million assessed by theEnvironmental Protection Agency forviolation of a federal law and paid in2024 and (b) an estimated loss of $30million from accruing a losscontingency. The loss will be taxdeductible when paid in 2025.The enacted tax rate is 25%. Therewere no temporary differences at thebeginning of the year and noneoriginating in 2024 other than thosedescribed above.1) Prepare the journal entry torecognize the income tax benefit of thenet operating loss in 2024.2) What is the net loss reported in 2024income statement?3) Prepare the journal entry to recordincome taxes in 2025 assuming pretaxaccounting income is $215 million. Noadditional temporary differencesoriginate in 2025.

Introduction: Deferred tax asset: When Income Tax Expense account is more than the Income Tax…

Answered: Fore Farms reported a pretax operating…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Fore Farms reported a pretax operating loss of $204 million for financial reporting purposes in 2024. Contributing to the loss were (a) a penalty of $4 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2024 and (b) an estimated loss of $10 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: 2022 $ 92 million 2023 $ 68 million Required: 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. What is the net operating loss reported in 2024 income statement? Prepare the journal entry to record income taxes in 2025 assuming pretax accounting income is $232 million. No…
Fore Farms reported a pretax operating loss of $176 million for financial reporting purposes in 2024. Contributing to the loss were (a) a penalty of $4 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2024 and (b) an estimated loss of $10 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: 2022 $ 80 million 2023 $ 56 million Prepare the journal entry to record income taxes in 2025 assuming pretax accounting income is $208 million. No additional temporary differences originate in 2025.
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Ayres Services acquired an asset for $80 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income Required: 2024 $ 330 20 (25) $325 Cumulative Temporary Difference Deferred Tax Liability ($ in millions) 2025 $350 20 (33) $337 2026 $365 20 (15) $370 $413 Beginning of 2024 2027 $ 400 For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. Note: Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000…
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 $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 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 $155 million. No additional temporary differences originate in 2022.
In 2025, Sheridan Company accrued, for financial statement reporting, estimated losses on disposal of unused plant facilities of $3650000. The facilities were sold in March 2026 and a $3650000 loss was recognized for tax purposes. Also in 2025, Sheridan paid $156000 in premiums for a two-year life insurance policy in which the company was the beneficiary. Assuming that the enacted tax rate is 20% in both 2025 and 2026 and that Sheridan paid $1220000 in income taxes in 2025, the amount reported as net deferred income taxes on Sheridan's balance sheet at December 31, 2025, should be a O $698800 asset. O $365000 asset. O $365000 liability. O $730000 asset.
Fore Farms reported a pretax operating loss of $300 million for financial reporting purposes in 2021. Contributing to the loss were (a) a penalty of $4 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 of the year and none originating in 2021 other than those described above. Taxable income in Fores’s two previous years of operation was as follows: 2019 $ 136 million 2020 $ 112 million Required:1. Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2021. Assume Fore will carry back its NOL to prior years.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…
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 $4 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. 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 $245 million. No additional temporary differences originate in 2022. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare the…
Ayres Services acquired an asset for $80 million in 2024. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2024. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income Required: 2024 $ 470 20 (80) $410 ($ in millions) 2025 $ 490 Cumulative Temporary Difference Deferred Tax Liability 20 (0) $ 510 2026 $ 505 20 $ 525 2827 $ 540 Beginning of 2024 20 (0) For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. $ 560 Note: Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions (i.e., 10,000,000 should…
On January 1, 2022, Gore, Inc. purchased a machine for €720,000 which will be depreciated €72,000 per year for financial statement reporting purposes. For income tax reporting, Gore elected to expense €80,000 and to use straight-line depreciation which will allow a depreciation deduction of €64,000 for 2022. Assume a present and future enacted income tax rate of 30%. What amount should be added to Gore's deferred tax liability for this temporary difference at December 31, 2022?

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