Depreciation as a tax She The term taxshi refers to the mount of income tax saved by deducted for conta Aime to many ding the then tas wary 1, 2017. The cost of the set with the year and are resolves 112.000. The company will the strene method of Oureciation Supreme's income for us before recording decor the wil beperear for the five years. The company theo Required Calete the entire as that premut pay the hannot puncte 1. Antoftanes pildat is not purchased 2. Amount of recationis purchased Anunt of residurchased 3. What is the amount of the depreciation taxeld Depreciation as a Tax Shield The term tax shield refers to the amount of income tax saved by deducting depreciation for income tax purposes. Assume that Supreme Company is considering the purchase of an asset as of January 1, 2017. The cost of the asset with a five-year life and zero residual value is $132,000. The company will use the straight-line method of depreciation Supreme's income for tax purposes before recording depreciation on the asset will be $48,700 per year for the next five years. The corporation is currently in the 40% tax bracket. Required: Calculate the amount of income tax that Supreme must pay each year if the asset is and is not purchased. 1. Amount of taxes paid if asset is not purchased is: 2a. Amount of depreciation if asset is purchased is: b. Amount of taxes paid if asset is purchased is: 3. What is the amount of the depreciation tax shield