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 ?
To tackle the on-going problem of metal thefts in the region, caused by high scrap values of metals such as copper and lead, West Midlands Police launched Operation Steel last August.
Among the changes are increasing the quality glass incentive payments for clean, color-sorted glass collected curbside from $25 per ton to $30 per ton; allowing the department to calculate a commingled plastic rate; authorizing mid-year adjustments of processing payments when scrap values change by 5 percent or more; authorizing $10 million annually until Jan.
An increase in global demand for non-ferrous metals has been reflected in significant increases in price and scrap values.