How are 'reasonably predictable' and 'useful economic life' defined?

The concepts of 'reasonably predictable' and 'useful economic life' are primarily defined with reference to the facts as they exist at the time the transaction is entered. This approach places emphasis on the conditions and expectations surrounding the specific transaction, recognizing that parties involved may have differing projections for the asset's performance and longevity based on their unique situational context.

By focusing on the current facts, this definition allows for a more tailored assessment of the asset's expected value and viability over time. It accounts for the nuances in market conditions and the specific circumstances surrounding the lease agreement, rather than solely relying on historical data or future projections that may not accurately reflect the reality of the situation at hand.

In contrast, using historical data of similar transactions may not account for changes in the market or advancements in technology that could affect the asset’s future performance. Similarly, market projections for future use could be speculative and subject to change, failing to ground the analysis in the immediate context that matters most at the moment of the transaction. Manufacturer specifications, while providing useful information about the asset, do not necessarily translate to actual economic life or predictability when external factors are considered.