The useful life is also generally understood to be the period between the investment and the time of disinvestment of an asset . However, the disinvestment does not have to coincide with the end of the useful life; the end of the useful life may already have occurred during the decommissioning . The useful life depends on the use , wear and tear of objects, sometimes also on their qualitative obsolescence . Since the expected useful life relates to the future, it can only be determined by estimating , taking empirical values into account.
A distinction is made between the technical, economic and legal useful life. The technical useful life depends on how long an object can provide a useful technical service . In the industrial wear a working under normal conditions operation (including industry-standard shift operation ) was assumed. The service life can be extended through maintenance , repair and maintenance . The economic useful life corresponds at most to the technical useful life, but is usually shorter than this. The economic useful life is the period in which an asset can be used economically ( profitably ). The economic useful life ends when the profitability and / or productivity deteriorate to such an extent that the profit is reduced. Legal useful lives mostly result from the term of contracts such as concessions , leasing , licenses , rent , lease or patents .
The legal term of the normal operational useful life from (1 ) EStG only states that the period of deduction for wear and tear is based on this. According to this provision, a period of 15 years is considered the normal useful life of the goodwill of a commercial enterprise or an agricultural and forestry enterprise. The normal useful life of items of property , plant and equipment is shown in the depreciation table .
A distinction is also made between estimated and actual useful life.
Estimated useful life
This means the planned duration of the use of an asset in a company. This duration and the corresponding period is the basis for the regular depreciation of the asset. The basis for determining the useful life are empirical values that are used for business cost accounting . For devices in construction , the useful lives in the construction equipment list are given in years of use (identical to the information in the official depreciation tables) and in months .
Actual useful life
In contrast to the estimated useful life, the actual useful life is only definitely determined after the use process has ended. The actual service life depends on the following influencing factors:
- Building material quality,
- Execution quality (e.g. assembly and installation),
- Natural influencing factors (e.g. wind, precipitation, air humidity, global radiation),
- Human influencing factors (e.g. wear and tear through use),
- Relationships between the components (e.g. through protective mechanisms such as paint on wood (positive influence) or contact corrosion of various metals (negative influence)),
- Maintenance (e.g. maintenance work such as cleaning, preservation, lubrication or repair work).
The terms total useful life and remaining useful life have a special meaning in property valuation . Remaining useful life refers to the number of years in which a building or structure with proper maintenance and management can be expected to be used more economically ( para. 6 ImmoWertV ). It is calculated from the total period of use (Appendix 3 of the Material Values Directive = SW-RL ).
A special feature here is that the duration of the purely technical usability of a building is not considered, but the period in which it can be used “at rents that are customary in the location”. If this is no longer possible due to damage and / or obsolescence of the building fabric, the material asset guideline speaks of "economic obsolescence" (No. 6.3. SW-RL) and the total useful life has been reached. The background is the interest on the capital tied up in the property . If the earnings value of the property (due to obsolescence) no longer achieves a return on capital that corresponds to the interest rate “comparable properties at normal market conditions”, marketability can no longer be assumed - and the limit of economic usability (useful life) has been reached. Elevator systems or heating systems, which only serve the use of a building , are tax-dependent components and are therefore subject to the depreciation (deduction for wear and tear) of the building.
Another aspect in this context is the modernization factor (Appendix 4 SW-RL). The total and remaining useful life can be extended beyond the originally assumed period through modernization (so-called modified remaining useful life ). For example, if the assumed total useful life of a building is 80 years and its current age is 40 years (= remaining useful life 40 years), the remaining useful life modified by modernization may be 55 years. The new remaining useful life is to be determined according to a specific procedure (defined in SW-RL Appendix 4). The age depreciation changes accordingly.
In commercial law , it is required that for fixed assets whose use is limited in time, the acquisition or production costs are to be reduced by scheduled depreciation ( (3 ) HGB ). These costs for an object are distributed according to a plan over the financial years in which it is expected to be able to be used in the company. The depreciation method and the useful life based on the depreciation table must still be determined for this.
In terms of shareholder value , the optimal useful life of an investment object is the maximum capital value of a company for the shareholders . The optimal service life depends largely on the decision as to whether and when a replacement investment is made.
The useful life determines the amount and duration of a depreciation. It is also decisive for the calculation of the manufacturer's warranty periods . Maintenance, repair and servicing in particular can extend the useful life, which is difficult to predict when purchasing an object. The useful life is usually shorter than the technical life , because the use of obsolete objects is usually no longer profitable.
With an expected service life of 2 years for a machine to be purchased, the following calculation results:
Here, the cost of the investment is the net income of the investment in the first year, the net income of the investment in the second year. Marginal performance of the capital (return on investment).
For example, if a machine costs 1,000 euros with a two-year service life and the entrepreneur expects 500 euros in the first year and 540 euros in the second year net income from the machine, this results in a marginal performance of the capital employed of 8%. If the market interest rate is 7%, investments are made; if it is above 8%, the investment is not made. From this it can be deduced that a longer useful life - given the net income - leads to a higher marginal efficiency and thus the probability of an investment increases.
- Literature on useful life in the catalog of the German National Library
- Wiktionary: Useful life - explanations of meanings, word origins, synonyms, translations
- Depreciation tables of the Federal Ministry of Finance
- Josef Zechner, duration of use , in: Wolfgang Lück (ed.), Lexikon der Betriebswirtschaft, 1990, p. 835
- Dieter Brümmerhoff / Heinrich Lützel (eds.), Lexicon of National Accounts , 2002, p. 282
- Stephan Meyering, Entrepreneurship through sole proprietorship purchase , 2007, p. 47 f.
- BFH, decision of November 26, 1973, Az .: GrS 5/71 = BFHE 111, 242
- Stephan Meyering, Entrepreneurship through sole proprietorship acquisition , 2007, p. 48
- Uwe Schönfelder, Determination of the condition of real estate using the ERAB method - Basics for maintenance strategies , Werner Verlag, 2012; ISBN 978-3-8041-5253-3
- BFH, decision of November 26, 1973, Az .: GrS 5/71
- TaschenGuide-Redaktion (Ed.), Kleines Lexikon Accounting , 2006, p. 8
- Josef Zechner, Calculation of the useful life , in: Wolfgang Lück (Ed.), Lexikon der Betriebswirtschaft, 1990, p. 835
- Verlag Dr. Th. Gabler (Ed.), Gablers Wirtschafts-Lexikon , Volume 4, 1984, Sp. 501