What is economic life?

What is economic life?

• A. The period before obsolescence.
• B. The total physical life of a property.
• C. The legal life of a property.
• D. The period during which a property is economically productive and valuable.

Answer: (D)

Economic life is the period during which a property remains economically productive and valuable. It ends when continuing to use or maintain the improvement no longer yields benefits because demand, technology, or market conditions have changed, making the asset uneconomical to operate. This concept focuses on value and profitability, not on how long the building physically stands. It differs from the total physical life, which is about physical durability, and from legal life, which relates to ownership rights.

Economic life is the period during which a property remains economically productive and valuable. It ends when continuing to use or maintain the improvement no longer yields benefits because demand, technology, or market conditions have changed, making the asset uneconomical to operate. This concept focuses on value and profitability, not on how long the building physically stands. It differs from the total physical life, which is about physical durability, and from legal life, which relates to ownership rights.