 Hello in this lecture we will define limited life. According to fundamental accounts and principles wild 22nd edition the definition of limited life is length of time an asset will be productively used in the operations of a business also called service life or useful life. When we're talking about the limited life or the service life or the useful life we are talking about generally property plants and equipment and thinking about how long that property plants and equipment will be useful to the business helping to achieve the business goal that business goal to generate revenue. For example our property plant and equipment in this example is a tank and that's going to help us to generate revenue in some way in the future and therefore we will put that on the books as property plants and equipment so the cost of the tank is $257,500 we then need to determine how much that tank will go down by in accordance with the limited life. Limited life how many years will we have this for how will we then allocate the cost over that time period depreciating in an appropriate way in relation to the use of that tank in accordance with the matching principle. In order to do that the one way is the straight line method to calculate this using the limited life within that calculation. Let's take a look at that we've got the cost of the tank $257,500 we're going to take out the salvage value that's what we believe it's will be used for or that's what it will be valued at at the end of the limited life that will give us the $237,500 then we're going to take that limited life for years meaning that's how long we believe that the life of this property plants and equipment will be useful to us in helping us to generate revenue at the end of that time period we believe we'll have to sell it or it will have a value a salvage value of $20,000 that means we're going to depreciate $59,375 for the limited life each year so that means we're going to depreciate the $59,375 each year for the limited life of four years meaning that we will have total accumulated depreciation at the end of the limited life of $237,500 leaving us with a book value equal to the salvage value of $20,000 at the end of the limited life