residual value

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Residual value

Usually refers to the value of a lessor's property at the time the lease expires.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
References in periodicals archive ?
The disposal value is above the 30 June 2015 book value representing a net initial yield of 4.3% and crystallises a GBP 24m profit on cost for Hammerson.
Certain impaired loans were charged down to disposal value in anticipation of near-term sales resulting in a decrease in the allowance for loan losses as a percentage of gross loans to 2.09% at September 30, 2014 from 2.35% at December 31, 2013.
allocated the expenditure on the fixtures to the special rate pool, or the general pool) by a seller and included in a fixed value requirement or a disposal value statement.
"This change is also likely to have an adverse affect on the disposal value of property.
Christie + Co is currently acting for Richard Fleming, Michael McLoughlin and Ian Corfield of KPMG, Joint Administrators of First Quench Retailing (FQR) Limited, to advise on the disposal of former First Quench stores, which operated under the well-known Threshers, The Local, Wine Rack, Bottoms Up, Victoria Wine and Haddows brands Steve Rodell, Christie + Co's Head of Bank Support and Business Recovery, looks at how advisors can achieve effective business turnaround as well as maximise disposal value.
Over the three-year life of this asset we can assume that the total tax depreciation will be 800,000 [pounds sterling] (ie, the initial cost of 1.1m [pounds sterling] less the disposal value of 300,000 [pounds sterling]).
"Throughout the last century, white goods had a positive economic disposal value," the report, authored by Dennis Siders, notes.
A quite separate issue is whether the estimate of disposal value is realistic.
The cash flows should be the best estimates available, weighted by their verifiability, and should include estimated future disposal value. For assets held for use in a business in which technology changes rapidly, the disposal of obsolete assets is routine but hard to estimate.
Whether the lifetime of this second scheme is a long one, or a short one, it is clear that pre-96 cattle will never have an opportunity to take advantage of the higher cull prices that will emerge as soon as UK cows are able to be sold on the EU's strong manufacturing beef market, so it is post-96 animals that will have the strongest disposal value.
City watchers had expected the coffee operations to fetch around pounds 75 million, but the actual disposal value is believed to have come in at under pounds 50 million.