Question: At December 31, 2014, Higley Corporation has one temporary difference which will reverse and cause taxable amounts in 2015. In 2014, a new tax act

At December 31, 2014, Higley Corporation has one temporary difference which will reverse and cause taxable amounts in 2015. In 2014, a new tax act set taxes equal to 45% for 2014, 40% for 2015, and 34% for 2016 and years thereafter.
Instructions
Explain what circumstances would call for Higley to compute its deferred tax liability at the end of 2014 by multiplying the cumulative temporary difference by:
(a) 45%.
(b) 40%.
(c) 34%.

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a The 45 tax rate would be used in computing the deferred tax liability at December 31 2014 if a net operating loss an NOL is expected in 2015 that is to be carried back to 2014 the enacted tax rate i... View full answer

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