The Class Life or Useful Life of a fixed asset is the number of years over which an asset can be depreciated. Class life is determined by tax law which defines a specific number of years to each type of depreciable asset.
What is a Fixed Asset?
A Fixed Asset is a long-term asset (or non-current asset), one that a business will hold for longer than a year. These are permanent, tangible items the business intends to own long-term (more than a year). Examples of Fixed Assets are Vehicles, Buildings, Equipment. These Fixed Assets may be referred to as Property, Plant, and Equipment assets or PP&E. They are used in normal business operations. Fixed Assets depreciate over time.
The most common classes of fixed assets and the related class life are listed below:
| Common Fixed Assets | Class or Useful Life |
| Cars, trucks, buses, appliances in a rental house | 5 years |
| Office furniture, Fixtures, Equipment, machinery | 7 years |
| Residential rental property | 27.5 years |
| Nonresidential real property | 39 years |
For a deeper understanding about depreciation, read this article:
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Difference Between Depreciation, Depletion, Amortization
In this article we break down the differences between Depreciation, Amortization, and Depletion, discuss how each one is used, and what the journal entries are to record each. The main
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Adjusting Journal Entries | Accounting Student Guide
When all the regular day-to-day transactions of an accounting period are completed, the next step is to check on the balances of certain accounts to see if those balances need
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What is a Contra Account?
A contra account is an account used to offset the balance in a related account. When the main account is netted against the contra account, the contra account reduces the
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How to Calculate Straight Line Depreciation
Straight-line Depreciation is used to depreciate Fixed Assets in equal amounts over the life of the asset. The basic formula to calculate Straight-line Depreciation is: (Cost – Salvage Value) /
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How to Calculate Declining Balance Depreciation
Declining Balance Depreciation is an accelerated cost recovery (expensing) of an asset that expenses higher amounts at the start of an assets life and declining amounts as the class life
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How to Calculate Units of Activity or Units of Production Depreciation
Units of Activity or Units of Production depreciation method is calculated using units of use for an asset. Those units may be based on mileage, hours, or output specific to