Refer to figure. 
True altitude calculation from a Flight Level: 
In this question, we are given a pressure altitude (in the form of a flight level) and are asked for the corresponding true altitude.

The first step is to compute the pressure correction by considering the deviation from the standard mean sea level pressure of 1013 hPa: 1013 hPa - 983 hPa = 30 hPa. We can assume a barometric lapse rate near the surface of 30 ft/hPa, the pressure correction can be calculated as follows: Pressure correction = 30 hPa x 30 ft/hPa = ­­­900 ft. This value needs to be subtracted from the pressure altitude as per the rules below:

Indicated altitude = 8500 ft - 900 ft = 7600 ft.

Next, we need to determine the temperature correction. The ISA deviation is ISA -10°C. Based on the 4% rule and its calculation mentioned in the rules below, the height correction for the temperature can be calculated as follows: Height correction for temperature = 4 × (-10) × (7600/1000) = -304 ft.

The temperature correction is subtracted to the indicated altitude as per the rules below, to give a true altitude of 7296 ft.

RULES. The following rules should be considered for altimetry calculations:

• All calculations are based on rounded pressure values to the nearest lower hPa.
• The value for the barometric lapse rate between MSL and 500 hPa to be used is 30 ft/hPa as an acceptable approximation of the barometric lapse rate (if not provided by the question).
• To determine the true altitude/height, the following rule of thumb, called the ‘4%-rule’, shall be used: the altitude/height changes by 4% for each 10°C temperature deviation from ISA. 
  For simplification: Height correction for the temp = 4 × (ISA DEV) × Indicated alt/1000 = _____ ft
• If no further information is given, the deviation of the outside-air temperature from ISA is considered to be the same throughout the whole layer.
• The elevation of the aerodrome has to be taken into account. The temperature correction has to be considered for the layer between the station (usually an aerodrome) and the position of the aircraft.

DEFINITIONS. 
Pressure Altitude: The altimeter indication with standard pressure (1013.2 hPa) set. 
Indicated Altitude: The altimeter indication with local QNH set. 
True altitude: The actual altitude of the aircraft above mean sea level.