With an effective age of 15 and total economic life of 60, what is the remaining economic life?
Correct Answer
A) 45 years, the life not yet used
Why this is correct: Remaining economic life is the portion of a building's total economic life that is still useful. It is calculated by subtracting the effective age from the total economic life. Here, 60 years (total life) minus 15 years (effective age) equals 45 years of remaining life. Why the other choices are wrong: '60 years, restarting after any sale' is incorrect because economic life is based on the property's condition, not ownership changes. '15 years, matching the effective age' confuses effective age with remaining life. '75 years, the sum of the two' is a simple addition error. Exam tip: Remember the formula: Remaining Economic Life = Total Economic Life - Effective Age.
Why This Is the Correct Answer
Why this is correct: Remaining economic life is the portion of a building's total economic life that is still useful. It is calculated by subtracting the effective age from the total economic life. Here, 60 years (total life) minus 15 years (effective age) equals 45 years of remaining life. Why the other choices are wrong: '60 years, restarting after any sale' is incorrect because economic life is based on the property's condition, not ownership changes. '15 years, matching the effective age' confuses effective age with remaining life. '75 years, the sum of the two' is a simple addition error. Exam tip: Remember the formula: Remaining Economic Life = Total Economic Life - Effective Age.
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