Physical life

Physical life is the period of time that an asset remains functional. This time period may be substantially longer than the useful life of an asset, since a functional asset may still be replaced by a more productive asset. Also, the asset may become too expensive to operate profitably after a period of time. For example, a machine may be able to process 100 units per hour, and can theoretically do so for the next 20 years. However, its useful life may be only 5 years, since it can be replaced at that time by a machine that can process 500 units per hour.