Useful life

Useful life refers to the period during which an asset, such as equipment or machinery, is expected to provide beneficial use to its owner. It is the timeframe when the asset is productive and valuable before it becomes inefficient, outdated, or requires significant repairs. This estimate helps businesses determine how long to allocate the cost of the asset over its operational life. Once the useful life ends, the asset may need to be replaced or further maintained, and its remaining value is typically minimal. Accurate estimation of useful life is important for financial planning and reporting.