residual value

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Residual value

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

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.

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.

residual value


scrap value

the amount for which a FIXED ASSET can be sold at the end of its useful working life. The anticipated residual value is taken into account in calculating the amount of DEPRECIATION to be charged against PROFITS each year for the use of the asset during its life. In many cases residual values are assumed to be nil, given the small residual values of many fixed assets and the difficulties of forecasting what such values may be many years ahead.
References in periodicals archive ?
The following table presents the estimated future asset retirement obligations and estimated net salvage values at various discount rates:
2 The Supervisory Committee considered that such changes in the estimated useful lives and estimated net salvage values of the fixed assets were made pursuant to the accounting standards of other enterprises in the industry in combination with the actual situation of the Company.
The proposed tax credit can alter the annual after-tax cash flows and salvage values of both types of cars.
Salvage values are not disclosed, but are presumably embodied within "sales of property, plant and equipment" in the Statement of Cash Flows.
To show higher net book values, salvage values in the 70% to 80% range, with a book life of 10 to 12 years, are not uncommon based on the make, model and onboard equipment.
Equipment salvage values were computed based on sales data of used equipment, as shown in Table IV.
Northcutt, argued that the impairment losses should be handled as changes in accounting estimates and recorded through revisions in the depreciation rates by adjusting the useful lives and salvage values of assets prospectively.
The program tracks all of your important information, including purchase dates, model numbers, serial numbers, manufacturer information, purchase prices, and salvage values.
Under the first assumption, the firm views future cash flows and salvage values as certain.
Depreciation expense, a component of operating income, decreased primarily due to adjustments taken earlier in the year to increase the salvage values of three of the Company's vessels.
This evaluation includes a number of assumptions relating to factors such as initial production rates, production decline rates, ultimate recovery of reserves, timing and amount of capital expenditures, marketability of production, future prices of crude oil and natural gas, operating costs, well abandonment and salvage values, royalties and other government levies that may be imposed during the producing life of the reserves.
8 million after tax), subject to final determination of asset salvage values.