LO.3 Identify whether each of the following items typically constitutes positive or negative evidence when a manufacturing entity assesses whether a valuation allowance is required or should be adjusted for its net operating losses. a Product orders are increasing b. Only two years remain for the taxpayer's net operating loss carryforward. c. Book income for the past three years totals to a negative amount d. Investment assets held by the taxpayer show a realized gain. e. The industry in which the taxpayer operates is in a down cycle. f. The entity's tax plan includes a switch from MACRS accelerated depreciation to straight-line