Useful Economic Life (UEL)
The useful economic life of an intangible asset refers to how long the asset stays useful and popular. When a company creates an intangible asset, like a catchy jingle or a brand name that people love, it’s really valuable at first. But over time, trends shift, new technologies emerge and people’s preferences evolve. It is inevitable that an intangible asset will lose its “wow” factor and not bring in as much money, the only question is timescale. Understanding an asset’s useful economic life helps businesses plan for the future by preparing a replacement asset or an overlap. Intangible assets like software or ideas have an especially small window during which they are most valuable. Other assets like brand or relationships can accrue value over time, so long as they are treated with care and good strategy.