Final answer:
The depreciation deduction is a tax deduction that allows businesses to recover the cost of an asset over its useful life. To figure it out, you need to determine the cost of the asset, its useful life, and the depreciation method to be used.
Step-by-step explanation:
The depreciation deduction is a tax deduction that allows businesses to recover the cost of an asset over its useful life. It represents the reduction in value of an asset due to wear and tear, obsolescence or use. To figure out the depreciation deduction, you need to determine the cost of the asset, its useful life, and the depreciation method to be used.
For example, let's say a company purchases a piece of machinery for $10,000 with an estimated useful life of 5 years. If they use the straight-line depreciation method, they can deduct $2,000 ($10,000 divided by 5) as a depreciation expense each year for 5 years.
It's important to note that tax laws and regulations regarding depreciation deductions may vary by country. To ensure accuracy, it is recommended to consult a tax professional or refer to the specific tax code in your jurisdiction.