CAF-2 · Chapter 8 · Question 11 of 15
A company purchased a solar plant for Rs. 10,000,000. The Provincial Government voluntarily provided a non-taxable subsidy of Rs. 2,000,000 specifically for the installation of this plant. What is the cost of the asset for computing tax depreciation?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) C) Rs. 8,000,000
Explanation
Under Section 76(10), the cost of an asset does not include the amount of any grant, subsidy, or assistance received, except to the extent to which the amount is chargeable to tax. Thus, 10,000,000 - 2,000,000 = Rs. 8,000,000.
More Income from Business - Part Two MCQs
- Q13A company acquired a software license (an intangible) on 1st April 2026 (falling in Tax Year 2026) for Rs. 365,000. The useful life of the…
- Q14If a depreciable asset is disposed of during a tax year, what is the rule regarding the normal depreciation deduction for that specific…
- Q15To improve accessibility, a company built a ramp for persons with disabilities at its office entrance. The cost of the ramp was Rs…
- Q1Which of the following is explicitly EXCLUDED from the definition of a "depreciable asset" under Section 22 of the Income Tax Ordinance…
- Q2What is the prescribed normal depreciation rate for computer hardware, monitors, and allied items under the Third Schedule?