Question: At December 31, 2017, Higley Corporation has one temporary difference which will reverse and cause taxable amounts in 2018. In 2017, a new tax act

At December 31, 2017, Higley has one temporary difference which will reverse and cause taxable amounts in 2018. In 2017, a new tax act set taxes equal to 45% for 2017, 40% for 2018, and 34% for 2019 and years thereafter.
Instructions
Explain what circumstances would call for Higley to compute its deferred tax liability at the end of 2017 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 2017 if a net operating loss an NOL is expected in 2018 that is ... View full answer

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