Wang plc is a pharmaceutical company. Due to the length of time, the company has to spend developing new medicines before they can be sold the company has accrued significant losses and has calculated a total deferred tax asset of £2,400,000 in relation to those losses for the year-end 31 March 2021. On 1 April 2021, the company is due to start selling the medicines and taxable profits are estimated at £480,000 for the year ended 31 March 2022. However, due to competition in the market and other market uncertainties, no profits can be anticipated for the year ended 31 March 2023 and beyond. The current tax rate is currently 20%.

For the year ended 31 March 2021 discuss the requirements for a tax asset to be recognized and calculate the amount to be included in the financial statements as a deferred tax asset. State any assumptions made in coming to your calculation.