The useful life of a property is an accounting estimate of the number of years it is likely to remain in service, functional and fit-for-purpose, while unserviceable properties refer to those that are no longer capable of providing the entity of expected benefits/service potential.
Section A of the NBC 425 partly states that disposal occurs when a piece of equipment or property can no longer provide efficient service or, though still working, has been rendered useless due to obsolescence.
Furthermore, Part II – Section B of the same NBC pertains to the conditions in the determination of disposable property, to wit:
- Property which can no longer be repaired or reconditioned;
- Property whose maintenance cost/costs of repair more than outweighs the benefits and services that will be derived from its continued use;
- Property that has become obsolete or outmoded because of changes in technology;
- Serviceable property that has been rendered unnecessary due to change in the agency’s functions or mandate;
- Unused supplies, materials and spare parts that were procured in excess of requirements; and
- Unused supplies and materials that has become dangerous to use because of long storage or use of which is determined to be hazardous. Hence, a PPE that exceeded its estimated useful life yet remains to be functional and does not meet any of the criteria mentioned above should NOT be considered as PPE items for disposal.