How is economic life defined?

Economic life is defined as the duration that an improvement contributes value to the land. This concept emphasizes not just the physical existence of the property but its economic utility and return on investment over time. Unlike physical lifespan, which may simply account for how long a building stands, economic life is concerned with how long the property can effectively serve its purpose in a way that justifies its costs.

In this context, the focus is on the period during which a property generates enough income or utility to be economically viable. Once basic functionality begins to diminish, even if the structure is still standing, the improvement may no longer be able to enhance the value of the underlying land, thus marking the end of its economic life.

The other options either refer to specific aspects of property life that do not capture the essence of economic value (such as physical lifespan), or they may indicate a point of deterioration that does not necessarily reflect the economic utility of a property (like obsolescence). Therefore, the emphasis here is solely on how long an improvement actively contributes to the value of the property, which aligns with the definition of economic life.