Close this search box.

Table of Contents

Wasting Asset


A wasting asset is an asset that has a limited useful life and experiences a decline in value over time, typically due to factors like depletion, consumption, or obsolescence. Examples of wasting assets include natural resources like mines, oil wells, or timberland, and intangible assets such as patents and copyrights. The value reduction in these assets is recognized through depreciation, depletion, or amortization accounting methods.


The phonetic pronunciation of the keyword “Wasting Asset” is: /ˈweɪstɪŋ ˈæsɛt/.

Key Takeaways

  1. A wasting asset refers to an item with a limited useful lifespan, which will eventually lose its value over time due to factors such as depreciation, depletion, and obsolescence.
  2. Common examples of wasting assets include tangible assets like machinery, vehicles, and equipment, as well as intangible assets such as patents, copyrights, and certain financial instruments like options.
  3. Businesses and individuals may need to manage the depreciation and disposal of wasting assets for taxation and financial reporting purposes. This often involves accounting for the loss in value over time, which can vary depending on the type of asset and method of depreciation used.


The term “Wasting Asset” is important in business and finance because it refers to assets that have a limited useful life and progressively lose their value over time due to factors such as wear and tear, obsolescence, or depletion. By understanding the concept of wasting assets, individuals and businesses can make informed decisions regarding their investments and financial planning. Proper management of wasting assets includes accounting for depreciation or depletion, evaluating the remaining useful life, and deciding whether to replace, upgrade, or dispose of the assets. This enables businesses to optimize operational efficiency, maintain profitability, and minimize potential tax implications, ultimately contributing to their long-term success and growth.


Wasting assets are unique entities within the finance and business realm, as they represent a particular class of assets with a finite useful life that naturally declines in value over time. These assets can range from tangible goods like machinery or natural resources such as coal mines, to intangible items including patents and copyrights. The primary purpose of a wasting asset is to generate revenue throughout its limited lifespan, making its management a crucial aspect of a business’s long-term performance. Astute businesses leverage wasting assets to maximize returns, which subsequently minimizes waste and bolsters overall profit margins. They achieve this by strategically allocating resources and engaging in careful planning, in tandem with their asset’s depreciation schedule. In the case of tangible wasting assets, such as leased property or exhaustible resources, efficient exploitation and allocation are vital to ensure the asset maintains a viable return on investment. For intangible assets, like intellectual property rights, businesses must skillfully monetize the asset within the confines of their delimited timeframe. By monitoring the value of wasting assets over their useful life, companies can better plan for the future while maximizing revenue generation from these time-sensitive instruments.


A wasting asset is an asset that has a predictable decrease in value over its limited life because of either depletion or obsolescence. Here are three real-world examples of wasting assets: 1. Natural resources: Natural resources like oil fields, coal mines, and timberland are classic examples of wasting assets. As these resources are extracted or harvested, their value decreases due to the finite nature of their availability. For instance, as oil is pumped out of an oil field, the recoverable reserves reduce, and thus, the overall value depreciates over time. 2. Depreciating machinery: Industrial equipment, such as manufacturing machines, transportation vehicles, and specialized tools, are wasting assets because their value declines with usage. As these assets wear down or become outdated, their worth decreases. For example, a construction company that purchases a crane will see its value diminish as the equipment is used on projects and experiences wear and tear. Additionally, technological improvements might render it obsolete over time. 3. Perishable goods: Items with a limited shelf life, such as food, beverages, and some pharmaceuticals, can be considered wasting assets. These goods have a diminishing value as they approach their expiration date, after which they may have little to no value. For instance, a grocery store stocking fresh produce or dairy products will see the value of these items decrease as they approach their sell-by or use-by dates, and may ultimately become unsellable or require disposal.

Frequently Asked Questions(FAQ)

What is a wasting asset?
A wasting asset is a tangible or intangible asset with a limited useful life and a decreasing usefulness or value over time. These assets lose value as they approach the end of their useful life due to depletion, depreciation, or obsolescence.
Can you provide examples of wasting assets?
Some examples of wasting assets include vehicles, machinery, equipment, patents, copyrights, mineral deposits, and options contracts. These assets lose value as they are used, wear out, or become obsolete.
How is a wasting asset different from a non-wasting asset?
A non-wasting asset holds its value or appreciates over time, whereas a wasting asset loses its value as time passes. For example, real estate typically appreciates over time and is considered a non-wasting asset, while a vehicle depreciates in value over time and is a wasting asset.
How is depreciation calculated for a wasting asset?
Depreciation is calculated by dividing the initial cost of the asset by its estimated useful life. This calculates the annual depreciation expense, which is then subtracted from the asset’s value in the financial statements. There are several methods of depreciation, such as straight-line depreciation, double-declining balance, or units of production method.
Can a wasting asset be repaired or maintained to extend its useful life?
Yes, regular maintenance and repairs can extend the useful life of some wasting assets like machinery or equipment. However, these expenditures cannot indefinitely prolong the asset’s life, and at some point, the asset will still become obsolete or useless.
How does a wasting asset affect a company’s financial statements?
A wasting asset will appear in the balance sheet as a non-current asset alongside its accumulated depreciation. The depreciation expense will also appear in the income statement. Over time, the book value of the wasting asset will decrease, reflecting its declining usefulness or value.
Can a wasting asset still generate income or have value?
Yes, a wasting asset can still generate income or hold value, even as it depreciates. For example, a vehicle used for business purposes can generate revenue even though it depreciates in value. Wasting assets can also hold some residual or salvage value at the end of their useful life, and this value can be considered when disposing of the asset.

Related Finance Terms

Sources for More Information

About Our Editorial Process

At Due, we are dedicated to providing simple money and retirement advice that can make a big impact in your life. Our team closely follows market shifts and deeply understands how to build REAL wealth. All of our articles undergo thorough editing and review by financial experts, ensuring you get reliable and credible money advice.

We partner with leading publications, such as Nasdaq, The Globe and Mail, Entrepreneur, and more, to provide insights on retirement, current markets, and more.

We also host a financial glossary of over 7000 money/investing terms to help you learn more about how to take control of your finances.

View our editorial process

About Our Journalists

Our journalists are not just trusted, certified financial advisers. They are experienced and leading influencers in the financial realm, trusted by millions to provide advice about money. We handpick the best of the best, so you get advice from real experts. Our goal is to educate and inform, NOT to be a ‘stock-picker’ or ‘market-caller.’ 

Why listen to what we have to say?

While Due does not know how to predict the market in the short-term, our team of experts DOES know how you can make smart financial decisions to plan for retirement in the long-term.

View our expert review board

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More