<Li> Estimated useful life of the asset </Li> <Li> A method of apportioning the cost over such life </Li> <P> Cost generally is the amount paid for the asset, including all costs related to acquisition . In some countries or for some purposes, salvage value may be ignored . The rules of some countries specify lives and methods to be used for particular types of assets . However, in most countries the life is based on business experience, and the method may be chosen from one of several acceptable methods . </P> <P> Accounting rules also require that an impairment charge or expense be recognized if the value of assets declines unexpectedly . Such charges are usually nonrecurring, and may relate to any type of asset . Many companies consider write - offs of some of their long - lived assets because some property, plant, and equipment have suffered partial obsolescence . Accountants reduce the asset's carrying amount by its fair value . For example, if a company continues to incur losses because prices of a particular product or service are higher than the operating costs, companies consider write - offs of the particular asset . These write - offs are referred to as impairments . There are events and changes in circumstances might lead to impairment . Some examples are: </P>

The depreciation rate of an asset is equal to