Useful life is how long you expect to use an asset, not how long it could physically last. A laptop may still work after six years, but if your policy is to replace laptops every three, the useful life for depreciation is three years. It can also be expressed in units — hours, miles or units produced — for the units of production method.
What shapes useful life
- Expected wear and tear and usage intensity
- Technical or commercial obsolescence
- Legal or contractual limits (e.g. a lease term)
- Your replacement policy and maintenance practices
Illustrative policy
Laptops 3 years · Servers 5 years · Office furniture 7–10 years · Vans 5 years · Buildings 25–50 years.
These are examples of what organizations choose, not rules — set your own and document why.
Book vs tax
Tax rules often prescribe recovery periods (for example MACRS property classes) that differ from the useful life used in the books.
In Asetavo
Useful life is set per asset or as a category default, and the book and tax profiles can use different values.