Problem $16-11($Static$)$ Net operating loss carryback and carryforward; multiple differences; financial statement effects $[$L$016-3,16-5,16-7]$

Fore Farms reported a pretax operating loss of $$137$ million for financial reporting purposes in $2024.$ Contributing to the loss were $($a$)$ a penalty of $$5$ million assessed by the Environmental Protection Agency for violation of a federal law and paid in $2024$ and $($b$)$ an estimated loss of $$12$ 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$$$32$ 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 $$160$ million. No additional temporary differences originate in $2025.$

Complete this question by entering your answers in the tabs below.

Required $1$