In the calculation of depreciation of a non current asset, we need
to know about the useful life of the asset.
Depreciation is the diminution in the value of an asset over
period of time by internal factors (like wear and tear) or/and by external
factors (like technology advancement).
The useful life
of an asset means the period of time during which the asset can be used in a
profitable way. That mean after this period, the cost of maintaining an asset
will exceed the benefits expected to be achieved by the use of that asset.
Estimated or actual useful life can be used in the calculation of
depreciation.
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