three years based on the company's past ROD experience with its most recent prior drug release. The income projections for the next five years prepared by the CFO are presented below. The CFO determined that, while a carryforward has an indefinite time period to consider, looking out at a period beyond 3 years was too unpredictable. However, the CFO does anticipate continued future taxable income in 2026 and beyond based on the potential long-term impact of the new drug and lack of any known competition. The CFO has been with Asbat for her entire career and has been extremely competent in terms of preparing income projections and meeting forecasts. The pretax income projections that exclude the impact of the new drug are based on reliable historical data on income and trends. The income effect of the new drug is based on information gathered and modified from the boost to income that Asbat experienced when its most recent significant drug was released. There have been no actual or expected changes in tax laws indicating a potential change in the statutory tax rate. The projections provided are the same that have been shared with analysts and investors. The CFO obtained a reversal schedule for the existing taxable temporary differences relating to the gross deferred tax liability as of December 31, 2020. prepared and clerically tested by the junior tax accountant. This schedule was reviewed by the tax director. The schedule indicated that there would be no reversals scheduled in the foreseeable future 2021 2022 2023 2024 2025 Pretax book loss, excluding new drug $(750.000) 5(600,000) $ (525.000) $ (490,000) $ (350,000) Income effect of new drug 2.000,000 3,500,000 3,750,000 Pretax book (loss) income (750.000) (600,000) 1 475,000 3,010,000 3,400,000 Net temporary differences (110.000) (110,000) (110.000) (110,000) (150,000) Future taxable (loss) income (860.000) (710,000) 1.365,000 2,900,000 3.250,000 Limitation on carryforwards 809% 8096 Future taxable income available to offset carryforward 1,092,000 2,320,000 2,600,000 Statutory tax rate 219% 219% 21% 219% 21% Impact on deferred tax asset balance * 180.600 149,100 (229.320) (487.200) (441,630) Beginning of year deferred tax asset balance 828.450 1,009,050 1 158,150 928.830 441,630 End of year deferred tax asset balance $1.009,050 $1,158,150 5 928,830 $ 441,630 $ #For 2025. possible offset would be $546.000, but there is only $441,630 left in the deferred tax asset account balance
