Economic life span is the period during which an asset provides economic benefit to its owner. This period is not limited by the lease term.

It reflects how long the organization expects to use the asset to generate value. The entity consumes the asset’s economic benefits over this time.

Estimating economic life helps organizations plan capital investments and budget for asset replacement.

An asset’s economic life can differ from its physical life. An asset may remain usable, but no longer provide economic value.