Depreciation on a capital investment (such as equipment)has the effect of decreasing the amount of income taxes that the company owning the asset must pay.

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This is true because depreciation is a non-cash expense that can be deducted from the company's taxable income, therefore reducing the amount of income taxes owed. It allows the company to spread the cost of the asset over its useful life, rather than taking a one-time deduction in the year of purchase.

Depreciation on a Capital Investment (Such as Equipment)has the Effect