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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