(1) Where a domestic corporation counts as losses the depreciation costs of tangible and intangible assets prescribed by Presidential Decree, such as buildings, machinery, equipment and patent rights, except land (hereafter in this Article, referred to as "depreciable assets") when settlement of accounts is fixed for the relevant business year, the depreciation costs appropriated, within the limit of the amount computed as prescribed by Presidential Decree (hereafter in this Article, referred to as "allowable depreciation"), shall be included in deductible expenses for the purpose of calculating the amount of income of a domestic corporation for the relevant business year, and the amount appropriated in excess of the allowable depreciation shall not be included in such deductible expenses. <Amended on Dec. 24, 2018>
(2) Notwithstanding paragraph (1), the depreciation costs of tangible assets and intangible assets prescribed by Presidential Decree, among depreciable assets owned by a domestic corporation that applies the accounting standards (hereinafter referred to as "Korean International Financial Reporting Standards (K-IFRS)") under Article 5 (1) 1 of the Act on External Audit of Stock Companies may be additionally included in the deductible expenses within the difference where any of the following amounts for each item of asset exceeds the amount included in the deductible expenses under paragraph (1): <Amended on Oct. 31, 2017; Dec. 24, 2018>
1. Assets acquired on or before December 31, 2013: Where the depreciation costs are appropriated according to the previous method without applying the K-IFRS, the amount equivalent to the depreciation costs to be included in the deductible expenses under paragraph (1) (hereafter in this Article, referred to as "previous depreciation costs");
2. Assets acquired on or after January 1, 2014: The amount equivalent to the depreciation costs computed by applying the standard service life prescribed by Decree of the Ministry of Economy and Finance (hereafter in this Article, referred to as "standard depreciation costs").
(3) Notwithstanding paragraph (1), where the relevant domestic corporation is entitled to exemption from or reduction of corporate tax under this Act and other statutes, the depreciation costs shall be included in the deductible expenses, as prescribed by Presidential Decree, for the purpose of calculating the amount of income of such domestic corporation for the relevant business year. <Amended on Dec. 24, 2018>
(4) In applying paragraph (1), where a domestic corporation counts any of the following amounts as losses, the allowable depreciation shall be calculated, deeming that the amount is counted as depreciation costs, for the purpose of calculating the amount of income of the domestic corporation for each business year: <Added on Dec. 24, 2018>
1. The amount spent to acquire depreciable assets;
2. Capital expenditure prescribed by Presidential Decree concerning depreciable assets.
(5) The amount in excess of the allowable depreciation that is not included in deductible expenses pursuant to paragraph (1) shall be included in deductible expenses for the subsequent business years by the method prescribed by Presidential Decree. <Added on Dec. 24, 2018>
(6) Any domestic corporation which includes depreciation costs in deductible expenses pursuant to paragraphs (1) through (5) shall submit a detailed statement of depreciation costs to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>
(7) In applying paragraphs (1) through (5), matters necessary for the method of appropriating depreciation costs as deductible expenses, deciding the timing for application of the K-IFRS, calculating previous depreciation costs and standard depreciation costs, changing the depreciation method, the special cases concerning and changes of service life, the special cases concerning the calculation of allowable depreciation of secondhand assets, and the scope of immediately depreciable assets, etc. shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018>[This Article Wholly Amended on Dec. 30, 2010]