how does depreciation of a capital good affect a company 
capital goods that a business does not consume within a single year of production cannot be entirely deducted as business expenses in the year of their purchase instead they must be depreciated throughout their useful lives with the business taking partial tax deductions spread over the years that the capital goods are in use this is done through accounting techniques such as depreciation depreciation accounts for the annual loss of the tangible asset s value during its useful life 