Final answer:
The time an asset is expected to last is called its economic life, which is different from its physical life. Economic life is an important concept in accounting, finance, and business management.
Step-by-step explanation:
The time an asset is expected to last is called its economic life. Economic life refers to the period of time during which an asset is considered to be useful and can generate economic benefits for its owner. It is different from the physical life of an asset, which refers to how long the asset physically exists before it becomes worn out or obsolete.
For example, let's consider a car. The physical life of the car may be 10 years, after which it becomes old and unreliable. However, the economic life of the car may be only 5 years, because after that period, the car may not have much resale value and its operating costs may outweigh its benefits.
The concept of economic life is important in various fields, such as accounting, finance, and business management. It helps businesses determine the optimal time to replace or retire assets, calculate depreciation expenses, and make informed decisions regarding investments and capital allocation.