DEFINITION of '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.

BREAKING DOWN '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.

RELATED TERMS
  1. Economic Life

    The expected period of time during which an asset is useful to ...
  2. Useful Life

    An estimate of how long one can expect to use an income-producing ...
  3. Physical Option

    An option that is based on a physical asset. Physical options ...
  4. Physical Asset

    An item of economic, commercial or exchange value that has a ...
  5. Absolute Return

    The return that an asset achieves over a certain period of time. ...
  6. Accumulated Depreciation

    The cumulative depreciation of an asset up to a single point ...
Related Articles
  1. Investing

    Explaining Absolute Return

    Absolute return refers to an asset’s total return over a set period of time. It’s usually applied to stocks, mutual funds or hedge funds.
  2. Investing

    What's a Fixed Asset?

    Fixed assets are tangible property that a business uses in the process of producing income. To qualify as a fixed asset, the item cannot be consumed or sold in less than a year. Fixed assets ...
  3. Investing

    Understanding Capital Assets

    A capital asset is one that a company plans on owning for more than one year, and uses in the production of revenue.
  4. Managing Wealth

    What's a Tangible Asset?

    Tangible assets are property owned by a business that can be touched -- they physically exist. Examples include furniture and fixtures, computer hardware, delivery equipment, leasehold improvements ...
  5. Insurance

    What Is the Best Age to Get Life Insurance?

    Learn about the optimal time for purchasing personal life insurance and why delaying the buying decision may have costly consequences.
  6. Investing

    An Introduction To Depreciation

    Companies make choices and assumptions in calculating depreciation, and you need to know how these affect the bottom line.
  7. Investing

    What is a Real Asset?

    A real asset is a physical asset that has value.
  8. Insurance

    What's Better: Whole Life or Term Insurance?

    Life insurance can be a difficult decision to make, especially for a young adult. Here's a look at the benefits and costs of getting whole life insurance.
  9. Insurance

    Whole or Term Life Insurance: Which Is Better?

    Learn the difference between term life insurance and whole life insurance. Understand when it is beneficial to buy each type of life insurance.
  10. Managing Wealth

    Life Expectancy: It's More Than Just A Number

    Find out how this factor determines your life insurance premiums and affects your payout.
RELATED FAQS
  1. Which consumer goods do Americans buy the most of?

    Explore the various factors that influence estimations of a tangible asset's useful life, as well as standard estimations ... Read Answer >>
  2. What are some examples of the main types of capital expenditures (CAPEX)?

    Learn about different expenses with acquiring assets that are considered capital expenditures and should be depreciated over ... Read Answer >>
  3. Is depreciation only used for tangible assets?

    Learn if tangible assets can be depreciated, as well as what other assets are eligible for depreciation so you can account ... Read Answer >>
  4. Why was the practice of depreciating assets for accounting purposes created?

    Read about why the practice of depreciation was created and how the uses of depreciation have morphed to adapt to technological ... Read Answer >>
  5. What is the difference between amortization and depreciation?

    Because very few assets last forever, one of the main principles of accrual accounting requires that an asset's cost be proportionally ... Read Answer >>
  6. Why do companies often treat events such as the purchase of an asset or construction ...

    Understand the capitalized costs of fixed assets and learn how they are reflected on a company's balance sheet and income ... Read Answer >>
Hot Definitions
  1. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  2. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  3. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  4. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  5. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  6. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
Trading Center