Economic life
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1. Financial reporting - IAS 16.
In the context of IAS 16, economic life refers to the total economically useful life of an asset, including under new ownership.
Contrasted in this context with the useful life, which refers to the usefulness for the current owner only.
- Useful life may be shorter than economic life
- "The useful life of an asset is defined in terms of the asset’s expected utility to the entity.
- The asset management policy of the entity may involve the disposal of assets after a specified time or after consumption of a specified proportion of the future economic benefits embodied in the asset.
- Therefore, the useful life of an asset may be shorter than its economic life."
- IAS 16 - Property, plant and equipment - paragraph 57.
2. Financial reporting - asset management.
In other contexts, the terms economic life and useful life are sometimes used interchangeably.
See also
- Accounting
- Asset management
- Financial reporting
- FRS 102
- IAS 16 (Tangible assets - Property, plant and equipment)
- IAS 36
- IAS 38 (Intangible assets)
- Impairment
- Intangible assets
- International Financial Reporting Standards (IFRS)
- Judgement
- Life
- Property, plant and equipment
- Reporting entity
- Useful economic life
- Useful life
- Utility
