Heslop Ltd acquired new equipment on January 1, 2020 at a cost of$29 million. The equipment has a ten year useful life in accordance with the company's accounting policy, but qualifies for capital allowances at a rate of 12.5% per annum on a straight line basis.

Additionally, during 2021, the entity recorded a provision to the tune of$9.8 million arising from ongoing legal action. This sum is not an allowable deduction for tax purposes in the 2021 year of assessment.

Local tax rates currently stand at 25%.

Required:

(a) With reference to the tax effect of the equipment, determine the company's total deferred tax balance for the year ended December 31, 2020.

(b) With reference to the tax effects of both the equipment and the provision, determine the company's total deferred tax balance for the year ended December 31, 2021.

(c) Assuming there was no opening deferred tax balance for 2021, explain how the figure derived for part (b) would be accounted for in the statement of profit or loss and the statement of financial position for the 2021 financial year.

(15 marks)