How do governments determine when outflows enhance the service capacity or extend the useful life of...

How do governments determine when outflows enhance the service capacity or extend the useful life of an asset? (referencing to specific GASB rules)

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Expert Solution

Govt determine the useful life of the particular asset as per GASB by seeing,

Nature of that assets
Use of that assets

In case of Intangible Assets like, Goodwill , Patent , Research & Developement useful life is resricted by legal or contractual obligation.

In case of Tangible Asset like fixed asset etc. Routine maintenance can also extend the useful life
of an asset, thereby increasing its productivity and delaying its replacement cost.

Following factors considered on the estimated useful lives of their capital assets.

Quality : Similar assets may differ substantially in quality, and hence, in their useful lives because of differences in materials, design and workmanship.
Application : The useful life of a given type of capital asset may vary significantly depending upon its intended use.
Environment : Environmental differences among localities can have an important impact on the useful lives of their respective capital assets.

ekkarill92 answered 1 year ago

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