In 2021, Heartfin Farms reported a pretax accounting loss of $196 million.During the year, the company paid a fee of $4 million due to a fine from the Food and Drug Administration.The company accrued an expense for estimated paid future absences of $30 million relating to the company’s employee vacation program. The amounts owed will be paid equally over the next two years ($15 million in 2022 and $15 million in 2023).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.In the prior two years, Hinton Farms reported taxable income of $64 million in 2020 and $88 million in 2019.What is Heartfin Farms' net operating loss carryforward in 2021?A.$10 millionB.$162 millionC.$30 millionD.$152 million

Through carryback of Net operating loss (NOL), an entity can adjust prior years taxable income for a refund of taxes already paid.Hence, the correct answer is Option A) $10 million

Answered: In 2021, Heartfin Farms reported a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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In 2021, Heartfin Farms reported a pretax accounting loss of $196 million.
During the year, the company paid a fee of $4 million due to a fine from the Food and Drug Administration.
The company accrued an expense for estimated paid future absences of $30 million relating to the company’s employee vacation program. The amounts owed will be paid equally over the next two years ($15 million in 2022 and $15 million in 2023).
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.
In the prior two years, Hinton Farms reported taxable income of $64 million in 2020 and $88 million in 2019.

What is Heartfin Farms' net operating loss carryforward in 2021?

A.	$10 million
B.	$162 million
C.	$30 million
D.	$152 million

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