what is useful life 
the useful life of an asset is an accounting estimate of the number of years it is likely to remain in service for the purpose of cost effective revenue generation the internal revenue service irs employs useful life estimates to determine the amount of time during which an asset can be depreciated there are a variety of factors that can affect useful life estimates including usage patterns the age of the asset at the time of purchase and technological advances understanding useful lifeuseful life refers to the mathematically estimated duration of utility placed on a variety of business assets including buildings machinery equipment vehicles electronics and furniture useful life estimations terminate at the point when assets are expected to become obsolete require extraordinary repairs or cease to deliver economic results the estimation of the useful life of each asset which is measured in years can serve as a reference for depreciation schedules used to write off expenses related to the purchase of capital goods useful life and straight line depreciationthe depreciation of assets using the straight line model divides the cost of an asset by the number of years in its estimated life calculation to determine a yearly depreciation value the value is depreciated in equal amounts over the course of the estimated useful life for example the depreciation of an asset purchased for 1 million with an estimated useful life of 10 years is 100 000 per year useful life and accelerated depreciationbusinesses may also elect to take higher depreciation levels at the beginning of the useful life period with declining depreciation values over the duration of the time span using an accelerated model the yearly write offs in the reducing balance depreciation model decline by a set percentage rate to zero using the sum of the years method depreciation declines by a set dollar amount each year throughout the useful life period until it is fully depreciated useful life adjustmentsthe duration of utility in a useful life estimate can be changed under a variety of conditions including the early obsolescence of an asset due to technological advances in similar applications to change a useful life estimate in this circumstance the company must provide a clear explanation to the irs backed by documentation comparing the old and new technologies for example if a company s original useful life estimate is 10 years but new technology is likely to render it obsolete after eight years the company may be able to accelerate depreciation based on a shorter schedule in this situation a company that has been depreciating assets based on a 10 year schedule will update depreciation values based on a newly abbreviated eight year useful life estimate 