USEFUL LIFE - 8617
Useful life is the period of time during which a capital asset/property provides service.
Capital assets/property for state agencies/departments using FI$Cal have standard estimated useful lives for all asset classifications.
For agencies/departments deferred/exempt from using FI$Cal, the State Controller’s Office (SCO) will continue to set estimated useful lives for capital assets for governmental funds. Agencies/departments will continue to set estimated useful lives using their existing process for non-governmental funds.
Changes to the useful life of an asset requires recalculation of depreciation/amortization expense for the remainder of the useful life.
Useful Life of Intangible Assets
Intangible assets are amortized over the estimated useful life of the asset. The estimated useful life of an intangible asset that arises from contractual or legal rights should be the shorter of the rights or estimated useful life of the underlying asset.
Renewal periods should be considered in determining the estimated useful life of the intangible asset if the agency/department plans to seek a renewal and the anticipated costs of the renewal are nominal in relation to the level of service capacity expected to be obtained through the renewal. Otherwise, the agency/department must account for the renewal as a replacement of the old intangible asset with a new intangible asset.
An intangible asset should be considered to have an indefinite useful life if there are no legal, contractual, regulatory, technological, or other factors that limit the useful life of the asset. For example, a permanent right-of-way easement is an intangible asset with an indefinite useful life. Intangible assets with an indefinite useful life are classified as non-amortizable.