(Explain Computation of Deferred Tax Liability for Multiple Tax Rates) At December 31, 2010, Higley Corporation has one temporary difference which will reverse and cause taxable amounts in 2011. In 2010 a new tax act set taxes equal to 45% for 2010, 40% for 2011, and 34% for 2012 and years thereafter.

Explain what circumstances would call for Higley to compute its deferred tax liability at the end of 2010 by multiplying the cumulative temporary difference by:

(a) 45%.

(b) 40%.

(c) 34%.