Useful Life
Accounting glossary · Understand, connect, apply
Useful life is the period an asset is expected to be available for use by the entity, or the production or similar units expected from it.
Example
A machine may physically last ten years but have a six-year useful life for a business expecting earlier replacement.
Remember the difference
Useful life is entity-specific and can be shorter than physical or legal life. Review estimates when appropriate.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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