Useful Life of Depreciable Assets
Useful Life of Depreciable Assets is the estimated life set by the business’s management during which it is expected that the Fixed Assets / No n Current Assets will remain useful for the business and after the expiration of such time period, it will be sold out or exchanged with similar kinds of Assets. Once Useful Life is set, it can be revalued, if required. When the Useful Life of Depreciable Assets is revised, then it is applied from the Period it is made and for future remaining periods. For Example, if the Cost of Equipment is Rs. 51000, having Useful Life is 5 Years and Residual Value is Rs. 2000. After 2 years, the management of the company revised the policy and estimated that the Assets will be Useful for business for 7 Years, then, so now remaining Useful is 5 Years instead of 3 Years. Now, Depreciatio n Expense is calculated on revised Useful Life that is calculated as shown below: Useful Life = 7 Years Depreciable Amount = Cost - ...