Markham plc acquires a machine for £200,000 on 1 January 20X2. The company estimates the useful life to be eight years with zero residual value, and adopts the straight-line basis of depreciation. The writing down allowance for tax purposes for this asset is 20% per annum on a reducing balance basis. LO5 Required:

In relation to this machine, calculate the deferred tax asset or liability balance at each of Markham plc’s financial year ends 20X2–20X9, and show the accounting entries which would be made. You may assume a tax rate of 25%.