2. In 2013, its first year of operations, Landon Corp. has a $700,000 net operating loss when the tax rate is 30%. In 2014, Landon has $300,000 taxable income and the tax rate remains 30%.

REQUIRED:

(a) Assume the management of Landon Corp. thinks that it is more likely than not that the loss carryforward will be realized in the near future because of a major contract that is expected to be signed in early 2015. Prepare the journal entry(s) to record income taxes for 2013 and 2014.

(b) Assume that at the end of 2014, the management of Landon Corp. thinks that it is more likely than not that the loss carryforward will not be realized in the near future. What additional journal entry should be made at the end of 2014?