Hayes purchases an item of equipment on 1 February 2021 for £350,000. The item has an estimated useful life of 10 years and an estimated residual value of £20,000. It is depreciated on a straight-line basis. According to the tax authority, tax allowances for this particular item can be claimed at 25% on a reducing-balance basis. The tax rate can be taken as 30%. Hayes estimates their income tax liability at £55,000 for the year ended 31 January 2022.
Required:
Explain and justify how Hayes would account for this transaction, preparing calculations where appropriate and showing the presentation requirements as at 31 January 2022
