How would you determine the useful life for a completely new asset, type of something you\u2019ve never had? Say that you\u2019re experimenting, expanding you business or trying to do something new.\u00a0<\/p>\n
Initially it\u2019s absolutely acceptable that you don\u2019t know the actual period of usage for the asset. You may use external data, ask around, ask from the supplier and so on. However, fact is that when you start using it, you will at some point realize what the actual useful life is for the asset for you specifically. Differences arise from method and time in active usage (i.e. some equipment have determined total working hours after which you can expect for the assets to be almost fully amortized and need extensive renovations for an example or repairs).<\/p>\n
You can determine the initial useful life based on whatever resources you have at your disposal, but it\u2019s important to change those periods as you become aware of the period that\u2019s closer to your actual usage.<\/p>\n
Remember also that the change in depreciation period is a change in management estimate and it\u2019s never done retrospectively. Unless, and that\u2019s very rare in practice, it turns out that the initial estimate was wrong and based on the knowledge at management\u2019s disposal already at the time of determining the useful life in the first spot, it should have been something else as opposed to what was determined.<\/p>\n","protected":false},"excerpt":{"rendered":"
How would you determine the useful life for a completely new asset, type of something you\u2019ve never had? Say that you\u2019re experimenting, expanding you business or trying to do something new.\u00a0<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25,33,55],"tags":[],"class_list":["post-4742","post","type-post","status-publish","format-standard","hentry","category-1-basic-accounting","category-1-5-property-plant-and-equipment","category-1-5-3-subsequent-measurement"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4742","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=4742"}],"version-history":[{"count":1,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4742\/revisions"}],"predecessor-version":[{"id":4743,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4742\/revisions\/4743"}],"wp:attachment":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=4742"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=4742"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=4742"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}