Tax deductions for depreciation result in tax savings that partially offset the cost of acquiring the capital asset.

Question

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Depreciation allows businesses to deduct the cost of a capital asset over its useful life, rather than all at once. This results in a lower taxable income and a reduction in taxes owed. While the tax savings do not fully offset the cost of the asset, they do partially offset it, making the purchase more affordable for the business.

Tax Deductions for Depreciation Result in Tax Savings That Partially