Legal Definitions - service life

Service Life

The service life of an item or property refers to the estimated duration during which it is expected to remain fully functional, provide its intended value, and be economically viable for use. It represents the period an asset is anticipated to be useful before it becomes obsolete, too costly to maintain, or physically worn out.

Here are some examples illustrating this concept:

• A Commercial Aircraft: An airline purchases a new passenger jet. The manufacturer and the airline estimate its service life to be around 25-30 years, assuming regular maintenance and upgrades. This means they expect the aircraft to safely and efficiently transport passengers for that period before it becomes too costly to maintain, technologically outdated, or reaches a point where it's more economical to replace it with a newer model.

  This illustrates service life because it defines the anticipated operational lifespan of a high-value, complex asset, considering both its physical durability and economic viability.

• A Public Library Building: A city constructs a new library. Architects and urban planners might project its service life to be 75-100 years. This projection accounts for the structural integrity of the building materials, the anticipated wear and tear from public use, and the expected period before major renovations or a complete rebuild would be necessary due to structural degradation or changing community needs.

  This example demonstrates service life by focusing on the long-term utility and structural longevity of a piece of public infrastructure, which is a fixed asset.

• A Software License for a Business: A company buys a perpetual license for a specialized accounting software. While the software itself doesn't physically wear out, its practical service life might be considered 5-7 years. This is because after this period, the software might no longer be compatible with newer operating systems, lack essential security updates, or fail to meet evolving regulatory requirements, making it effectively obsolete and requiring a switch to a newer version or different product.

  This example shows service life applied to an intangible asset, where "usefulness" is determined by factors like compatibility, security, and relevance rather than physical wear and tear.