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Absolute Physical Life

What is 'Absolute Physical Life'

The length of time that it takes for an asset takes to become fully depreciated, at which time it provides no additional use. The absolute physical life is often taken into consideration when companies purchase assets. The measure is typically associated with assets that have low risk of becoming technically obsolete.

Explaining 'Absolute Physical Life'

When looking at the life of an asset, people can take contrasting perspectives. For example, let's examine a manager's decision to purchase new computers for his or her business. The manager may decide to base the decision on how long it will be until the computers become obsolete by conventional standards. On the other hand, if the manager isn't worried about having older technology, he or she may care only about the absolute physical life of the computers, which can be considerably longer.


Further Reading


Scaling and criticality in a stochastic multi-agent model of a financial market
www.nature.com [PDF]
… better maintenance of the rule of law, smaller government consumption, longer life expectancy, more … The exposition keeps mathematical notational to an absolute minimum, and uses everyday terminology in … it is, but the result is to gloss over aspects of the physical or biological …

Financial Market Efficiency Should be Gauged in Relative Rather than Absolute TermsFinancial Market Efficiency Should be Gauged in Relative Rather than Absolute Terms
mpra.ub.uni-muenchen.de [PDF]
… better maintenance of the rule of law, smaller government consumption, longer life expectancy, more … The exposition keeps mathematical notational to an absolute minimum, and uses everyday terminology in … it is, but the result is to gloss over aspects of the physical or biological …

Economic assessment of municipal waste management systems—case studies using a combination of life cycle assessment (LCA) and life cycle costing (LCC)Economic assessment of municipal waste management systems—case studies using a combination of life cycle assessment (LCA) and life cycle costing (LCC)
www.sciencedirect.com [PDF]
… better maintenance of the rule of law, smaller government consumption, longer life expectancy, more … The exposition keeps mathematical notational to an absolute minimum, and uses everyday terminology in … it is, but the result is to gloss over aspects of the physical or biological …

The age of reason: Financial decisions over the life cycle and implications for regulationThe age of reason: Financial decisions over the life cycle and implications for regulation
muse.jhu.edu [PDF]
… better maintenance of the rule of law, smaller government consumption, longer life expectancy, more … The exposition keeps mathematical notational to an absolute minimum, and uses everyday terminology in … it is, but the result is to gloss over aspects of the physical or biological …

The normative economics of health care finance and provisionThe normative economics of health care finance and provision
www.jstor.org [PDF]
… better maintenance of the rule of law, smaller government consumption, longer life expectancy, more … The exposition keeps mathematical notational to an absolute minimum, and uses everyday terminology in … it is, but the result is to gloss over aspects of the physical or biological …

The ethical poverty line: a moral quantification of absolute povertyThe ethical poverty line: a moral quantification of absolute poverty
www.tandfonline.com [PDF]
… better maintenance of the rule of law, smaller government consumption, longer life expectancy, more … The exposition keeps mathematical notational to an absolute minimum, and uses everyday terminology in … it is, but the result is to gloss over aspects of the physical or biological …



Q&A About Absolute Physical Life


Why would a manager care about how long it will be until computers are obsolete by conventional standards?

A manager may care because he or she wants to make sure they have enough computers before they need new ones.

What does the term "low risk" mean in this context?

Low risk means there is little chance of becoming technically obsolete.

What is the length of time that it takes for an asset to become fully depreciated?

The length of time that it takes for an asset to become fully depreciated is the absolute physical life.

Why might a manager not worry about having older technology?

A manager may not worry about having older technology if he or she doesn't mind using older technology.

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