Useful life

Accounting.

The length of time an asset is in use.

The asset should be depreciated over its useful life.

Estimation of useful life for IAS 16 financial reporting is a matter of judgement

"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.

The estimation of the useful life of the asset is a matter of judgement based on the experience of the entity with similar assets."

IAS 16 - Property, plant and equipment - paragraph 57.

See also

• Accounting
• Asset management
• Depreciating asset
• Depreciation
• Economic life
• Financial reporting
• IAS 16
• Judgement
• Life
• Property, plant and equipment
• Reporting entity
• Short life asset
• Useful economic life
• Utility

Other resource

• IAS 16 text