Service life
The useful life is the period referred to in tax law and business administration, through which a commodity can be used operationally.
A distinction is made between estimated and actual useful life.
Managerial viewing
Estimated useful life
This refers to the planned duration of use of an asset in a company. This period and the corresponding period is the basis for the regular depreciation of the asset. Form the basis for determining the useful life of empirical data that are reported for the business cost accounting.
For units in the building industry, the useful lives in the Baugeräteliste in use years ( the same ones used in the official depreciation tables ) and is expressed in Vorhaltemonaten.
Actual useful lives
In contrast to the estimated useful life of the real working life is definitely determined only after termination of the usage process.
The actual period of use is influenced by:
- Technical obsolescence,
- Wear,
- Maintenance and care,
- Repairs,
- Weathering.
With the help of investment appraisal, the economically optimal useful life can be determined.
Land valuation
Of particular importance are the concepts of total useful life and remaining useful life at the property valuation. Remaining useful life means the number of years in which a building or structure upon proper maintenance and management probably can not be economically used (§ 6 para 6 ImmoWertV ). It is calculated from the total useful life (Annex 3 of the property value Directive).
Tax useful life
Fiscally crucial and thus for the calculation of depreciation in authoritative are the so-called depreciation tables in which the tax authorities for many goods determines the useful life of binding. Deviations from these guidelines are only possible if a different - usually shorter - life proved, or may be established. Partial is also spoken by TBR ( time between replacement ).
One reason for shortening the useful life may be an above-average use of the asset, such as shift work. From a two -shift operation, shortening the useful life is possible. The case occurs also in purchase of used equipment.