Answer 1) | |||
Computation of Taxable Operating Loss (2021) | |||
Particulars | Amount (In million $) | ||
Pre tax operating Income (Loss) | -220 | ||
Add: Non deductible penalty | 16 | ||
Add: Estimated loss contigency deductible in 2022 | 30 | ||
Taxable operating income (Loss) | -174 | ||
Journal Entries - Fore Farms (2021) | |||
Event | Particulars | Debit (In Million) | Credit (In Million) |
1 | Deferred tax assets Dr ($204*25%) | $51 | |
To Income Tax Benefits - Net operating loss | $51 | ||
(To record deferred tax assets for temporary differences and loss carry forward) | |||
Answer 2) | |||
Income Statement - Fore Farms | |||
Particulars | Amount (In Million $) | ||
Operating Income (loss) before income tax | -220 | ||
Income tax benefit - Net operating loss | 51 | ||
Net Operating Income (Loss) | -169 | ||
Answer 3) | |||
Journal Entries - Fore Farms (2022) | |||
Event | Particulars | Debit (In Million $) | Credit (In Million $) |
1 | Income tax expense Dr | 63 | |
To Income Tax payable (48*25%) | 12 | ||
To Deferred tax assets | 51 | ||
(To record income tax expense for 2022) | |||
Fore Farms reported a pretax operating loss of $220 million for financial reporting purposes in 2021....
Fore Farms reported a pretax operating loss of $184 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...
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fore farms reported a pretax operating loss of $137 million for financial reporting purposes in 2021. Contributing to the loss were a penalty of $5 million assessed by the environmental protection agency for violation of a federal law and paid in 2021, and b.) an estimated loss of $12 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...