Multiple choice

Useful life is

  1. the period over which a depreciable asset is expected to be used by the enterprise

  2. the number of production or similar units expected to be obtained from the use of the asset by the enterprise

  3. either (1) or (2)

  4. none of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Useful life can be defined in two ways: either as the time period (years) an asset is expected to be used, OR as the productive capacity (units of production) expected from it. Both definitions are valid under accounting standards. The choice depends on whether the asset's life is better measured by time or usage.

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