Please answer the following three questions:

(a) Jack’s business has a financial year end of 31 May. He bought an item of plant for £225,000 on 1 June 2022 and estimated its useful life to be six years and its residual value to be £45,000. He believed that the straight-line method of depreciation would best reflect the pattern of benefits expected from the plant.

He reviews the estimated useful lives and residual values of his assets each year, and, as of 1 June 2026, his assessment was that the plant had a remaining useful life of five years and a residual value of £10,000. He still believed that the straight-line method would best reflect the pattern in which the plant’s benefits would be consumed by his business.

What is the depreciation expense on this plant for the year ended 31 May 2027?

(b) Noah’s business has a financial year end of 31 December. He bought a piece of equipment for

£180,000 on 1 April 2021 and charged depreciation at 20% per year straight line on a monthly basis.

He reviews his depreciation methods annually and, as of 1 January 2025, he judged that the reducing balance basis, at a rate of 40% per year, would provide a better reflection of the pattern of consumption of benefits expected from the equipment.

For this asset, show for each of the years ended 31 December 2021, 22, 23, 24, 25, 26 and 27:

(i) the depreciation expense for the year;

(ii) the accumulated depreciation as at the end of the year; and

(iii) the carrying amount as at the end of the year.

(c) Dylan’s business has a financial year end of 31 December and uses the straight-line method of depreciation for machinery. He purchased a new machine for £250,000 on 1 January 2022. Its estimated useful life was 10 years with a residual value of zero.

On 1 January 2026 the machine was damaged in an accident. It can still be operated following the accident, but at reduced capacity and with a remaining useful life of only three years. An impairment review was conducted which concluded that the value of the machine to the business following the accident on 1 January is now only £120,000. The estimated residual value remains zero.

What is the total charge to be recognised in the income statement for the year ended 31 December 2026 in relation to this machine (i.e. the impairment loss and the depreciation expense)?