Residual Value (redirected from Salvage Values)

Residual value

Usually refers to the value of a lessor's property at the time the lease expires.

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Residual Value

In accounting, an estimate of the value of an asset at the end of its depreciation. For example, a firm's computer depreciates each year. When it breaks down or becomes obsolete, it has a residual value; it is calculated by the best guess of the net cash inflow when it is sold at the end of its life. It will never be above the blue book value.

In price regulated industries, the residual value may be a negative value because it includes the net cash outflow in removing the asset from where it was used. For example, nuclear energy plants must store the nuclear waste at the end of their useful life. This cost is a contributing factor in the residual value. It is also called the salvage value or scrap value. See also: Absolute Physical Life, Obsolescence.

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residual value

The price at which a fixed asset is expected to be sold at the end of its useful life. Residual value is used in calculating some types of depreciation. Also called salvage value, scrap value.