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(A) Natural Life
(B) Accounting Life
(C) Physical Life
(D) Estimated Economic Life
Period over which an asset (machine, property, computer system, etc) is expected to be usable, with normal repairs and maintenance, for the purpose it was acquired, rented, or leased.
I would go for option D if I have to just give answer. Otherwise, it depends really on the asset itself. Some small item for $1000, the economic life could be10 years but it has the situation of getting spoiled instantly on occasions. Example, Refrigerator : it can be used for15 years but you canot fix the depreciation for15 years base. It has to be5 to6 years only because of its electronic nature and trends and innovation in the industry. Hope you understand. So I would suggest to get various factors into account when fixing the rate. Personally, i would go min1 year to max6 years for normal fixed assets like office equipments, vehicles and household electronics; plants and machinery on industry standard.
However, in tax regimes, you have no choice but to go with tax laws.
Malik.
(D) is the Correct Ans.
Estimated Economic Life.
The answer is D. Estimated Economic Life
The cost of a Fixed Assets of a business has to be written off over its Accounting Life. but loss or profit will calculated when such asset decide to sale or obsolete.
Depreciation of asset should be based upon its useful life, i-e lower of accounting life and natural life of an asset (which may vary specially in case of leased asset)
Estimated Economic Life is the life of an asset over which it can generate benefit for the company (useful life)
Economic life of the asset
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