The expected period of time during which an asset will be useful to its owner without limitation by the lease term, over which the economic benefits embodied in the asset are expected to be consumed by the entity.

Estimating the economic life of an asset is important for businesses to determine the time to invest in new equipment. In addition, businesses must plan to have sufficient funds for the purchase of replacements for expensive equipment after it has exceeded its useful life.

The economic life of an asset could be different from the actual physical life of the asset.