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CMA Intermediate · Financial Accounting · Property, Plant and Equipment (AS 10)

Under AS 10, useful life of an asset may be expressed as:

AS 10 defines useful life as the period over which an asset is expected to be available for use by the enterprise, or the number of production or similar units expected to be obtained from it. It rests on expected utility, not on physical durability or ownership.

  1. AOnly the number of years for which the asset is legally owned
  2. BThe period over which the asset is expected to be available for use, or the number of production or similar units expected to be obtained from itCorrect
  3. COnly the period over which the asset is physically capable of lasting
  4. DThe period over which the asset is fully financed by loans

Explanation

AS 10 defines useful life either as the period over which an asset is expected to be available for use by the enterprise, or as the number of production or similar units expected to be obtained from it. Physical life and legal ownership are not the test; expected utility to the enterprise is.

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