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 ?
However, what has been noticeable in recent months is a significant shift in the commercial buying processes with large equipment users becoming more financially aware of the ownership, operational cost and disposal values of their inventory.
In a statement, the state-owned firm said that based on the minimum disposal values of the properties, it expected to raise at least P181.5 million from the bidding on Nov.
Cash flows from capital items such as the initial outlay and any asset disposal values must be included, too.
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]).
420, which show the character of the recognized gain or loss for three hypothetical disposal values of a business machine.
Knowing the current or future disposal values of their vehicles is vital to understanding and managing financial risk.
Some recent cases have resulted in disposal values being much less than book values, because other claims on the collateral and the specific nature of the real estate involved had not been taken adequately into account.
The company, which also warned the challenging trading environment would see full-year profits come in at the bottom end of expectations, said it would not sell the businesses until it felt they would realise more appropriate disposal values.