All three forms of obsolescence (functional, technical and economical) need to be considered in a systematic and hermetic way for a supportable and defendable position. The analysis includes, but is not limited to, an analysis of technical standards and operational records, accounting literature and standards, interviews with experts for the design and operation, analysis of the economic environment and future projections. Our approach includes an analysis of the expected effects implied by the economic useful life analysis on your accounting system.
Economic Useful Life
Definite life long-term assets are depreciated over their economic useful life. This is normally based on a prudent estimate of economic life at asset purchase date and can be influenced by applicable regulatory requirements. Depreciation periods can change during the life of an asset, possibly resulting in an impairment or hidden reserves. An Economic Useful Life Analysis can be helpful when there is an indication that the depreciation period might have changed.