Final answer:
The recovery period of an asset is determined based on its estimated useful life. Other factors may also be considered when determining the recovery period.
Step-by-step explanation:
The recovery period of an asset is determined based on its estimated useful life. This refers to the length of time that the asset is expected to be used in a productive capacity before it becomes obsolete or no longer economically feasible to maintain.
For example, a computer may have an estimated useful life of five years. This means that after five years, it is expected to be replaced with a new computer because it would be outdated and not as efficient as newer models.
Other factors may also be considered when determining the recovery period of an asset, such as industry standards, technological advancements, and maintenance costs.