Economic life

Economic life refers to the period during which an asset, such as machinery, building, or equipment, is expected to be useful and productive for its owner. It starts when the asset is put into use and ends when it no longer provides economic benefits—either because it becomes outdated, worn out, or inefficient. The concept helps businesses determine how to allocate costs over an asset's useful period, influencing decisions on depreciation, maintenance, and replacement. Essentially, economic life is the timeframe during which an asset generates value and contributes to the company's operations.