Assets and Depreciation Chapter- 10
ICMAP PAST PAPES THEORECTICAL QUESTIONS
Q. NO. 3(b) Fall 2016
Explain the conditions where no gain or loss shall be taken to arise on the disposal of an asset, and how the
consideration would be determined for an asset disposed of in a non-arm's length transaction under the
provisions of section 79 and 78 of the Income Tax Ordinance, 2001.
Q. NO. 3(c) Fall 2016
Discuss what shall be the treatment of a depreciable asset under section 22 of the Income Tax Ordinance,
2001, if it is disposed of in any tax year.
Q. NO. 4(b) Spring 2015
The board of directors of M/s ABC Star Limited is planning to replace some fixed assets of the company
due to advancement of technology and for bringing improvement in the quality of its product. However, the
board is considering disposal of many assets in this regard and seeking your guidance in respect of the
considerations received on disposal of such assets to charge gain or loss in the profit and loss account so
as to arrive at the actual income for tax purpose.
Required:
Being a Tax Consultant, explain to the board about the value of consideration received on disposal of
following assets for tax implications as per the provision of the section 77 of the Income Tax Ordinance,
- Discuss the value of asset which will be treated as consideration in each of the following cases:
- The company sold out some machinery and vehicles to other small companies and received
considerations in rupees and kinds in respect of each asset. - The board found in the records that some of the machines and furniture were lost or destroyed by fire
during the tax year. - One of the directors has used company's furniture for its personal consumption.
Q. No 2(a) March 2015 In the light of section 24 of the Income Tax Ordinance, 2001:
(i) Define the term, intangibles.
(ii) Briefly explain that how the allowable deduction will be computed, if and intangible asset is not used
for the whole tax year in deriving income from business chargeable to tax?
Q. No 2(b) March 2015 Ms. Sara is a resident individual of Pakistan. She is moving to Canada and
planning to sell all assets of her business to Sigma (private) Limited, a resident company of Pakistan and a
wholly owned company. Before leaving Pakistan, Sara intends to file her income tax return and seeking
your advice in respect of the conditions where no gain or loss will be accounted for on disposal of her
baseness to Sigma.
Required: Being a Tax consultant briefly state Ms. Sara regarding conditions where no gain or loss will be
accounted for on disposal of all the assets to Sigma as per section 95 of the income tax ordinance, 2001
Q. No. 2 (a) (i) Spring 2013 Define the term depreciable asset in accordance with the provisions of
section 22(15) of the Income Tax Ordinance, 2001.
Q. No. 2 (a) (ii) Spring 2013 Considering the depreciable asset is used in a tax year partly for
deriving income from business chargeable to tax and partly for another use, describe the extent to
which the deduction may be admissible on account of depreciation.
Q. NO. 3(a) SUMMER- 2008 What is treatment of a depreciable asset under section 22 of the Income Tax
Ordinance, 2001 if it is disposed of in a tax year?