Question

In what way does an asset's service life differ from its physical life?

A. Calculation of an asset's service life includes consideration of the asset's salvage value, while calculation of its physical life does not.
B. An asset's service life is always longer than its physical life.
C. An asset's service life is the length of time an asset is of use to its original owner, while its physical life is how long the asset will be used by its all owners.
D. An asset's service life is the time an asset will be used by a company, while its physical life is how long the asset will last

Answer 1

An asset's service life is the length of time it is useful to the company or owner, while its physical life is the actual period of time it functions. The service life takes into account factors such as obsolescence, wear and tear, and economic usefulness.

Step-by-step explanation:

An asset's service life refers to the period of time that an asset is expected to be useful to the company or owner. It is the length of time during which the asset will be used in operations, and it is determined by factors such as technological obsolescence, wear and tear, and economic usefulness.

An asset's physical life, on the other hand, refers to the actual period of time that the asset is usable or functioning. It is the time from the asset's acquisition to disposal, including any repairs or maintenance.

In summary, an asset's service life represents how long it will be useful to the company or owner, while its physical life refers to how long it will actually function before it is no longer usable.