Because the minimum lease payment, and thus the receivable, no longer includes the guaranteed
residual value, the guarantee is now shifted away from the receivable balance and into the residual asset balance; as seen in the sidebar, An Example of R&R Equiment Lease Accounting by the Lessor, this will result in a higher portion of the gross profit being deferred.
In this period, owners have
residual value at their disposal (established via assets-based or income-based methods).
Sporty: The Audi TT Roadster is top of the league for holding its
residual value.
According to historic costs, the
residual value can be defined as being the estimated value of the product in dollars, at the present value of the dollars (without taking in consideration the inflation), at the end of the life-cycle of the product.
Organizations that worked with Converge and its IT asset disposition services division NextPhase recovered more than $28 million in
residual value from their remarketed electronic equipment, according to the company.
Under the new system, the company will examine the second-hand car market and other data more thoroughly to estimate the reasonable
residual value, according to Toyota Finance.
Illustrations 8-9: Illustration 8 is a leasing transaction in which the tax consequences depend on whether the leased property is reasonably expected to have a
residual value of 15% of its value at the beginning of the lease.
Under the relevant tax law, the tax consequences of a leasing transaction depend on whether the property to be leased is reasonably expected to have a
residual value of 15 percent of its value at the beginning of the lease.
IFRS makes constant reference to value: recoverable value,
residual value, fair value, useful value.
AircraftRisk.com will offer a suite of risk management tools to aid aircraft and aircraft component manufacturers, aircraft leasing companies, and financial institutions in the analysis and measurement of risk related to asset and
residual value guarantees, aircraft leasing, securities, and manufacturer-contingent liability portfolios.
They are life cycle cost, present value,
residual value, benchmark, evaluation criteria, terms and conditions, order of precedence, lease versus purchase, fixed price options and unbalanced proposal guidance.
That's the difference between the
residual value (what the car is worth at lease end) and the net capitalized cost (what you pay for the car).