Define: Useful Life

UK Accounting Glossary

Definition: Useful Life



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Full Definition of Useful Life


Useful life refers to the expected period of time that an asset remains in use or usable. Costs of assets with a useful life of one year or less are typically deducted as expenses. However, assets with a useful life greater than one year can be depreciated. Methods of depreciation all track the remaining value of the asset over the asset’s useful life. For example, for intangible property, the straight line method of depreciation is often used. However, in order to depreciate most tangible property (except land) over their useful life, the Modified Accelerated Cost Recovery System (MACRS) is typically used. Using an accelerated method accounts for more of the loss of value for the asset earlier in the asset’s useful life. The IRS provides tables of the useful life of most capital equipment.

Publication 946 entitled, “How to Depreciate Property” contains general information on depreciation over an asset’s useful life. In addition, please see the following IRS publications for specific descriptions of depreciating assets over their useful life:

Publication # Title
———————————————————————————
463 Travel, Entertainment, Gift, and Car Expenses
544 Sales and Other Dispositions of Assets
551 Basis of Assets
587 Business Use of Your Home (Including Use by Daycare Providers)


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Definition Sources


Definitions for Useful Life are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 5th February 2020.