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Amber Ltd bought a building for ₹20,00,000 (life 4 years, nil scrap). Accounting depreciation is straight-line; tax depreciation is 50% in year 1, 50% in year 2 and nil thereafter. Tax rate 30%. What is the annual accounting (straight-line) depreciation on the building?
A₹10,00,000
B₹5,00,000
C₹4,00,000
D₹2,50,000
Answer & Solution
Correct answer: B. ₹5,00,000
1. Straight-line depreciation = (Cost − scrap) ÷ life.
2. = (₹20,00,000 − 0) ÷ 4 years.
3. = ₹5,00,000 per year.
_Source: ICAI BoS CA Intermediate Paper 1 (Advanced Accounting), Sept 2025 — Q.1(a), AS 22 Accounting for Taxes on Income._
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