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.

or

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 classic literature ?
He had entertained vague ideas of hiring a cart, of achieving miraculous repairs, of still snatching some residual value from his one chief possession.
AUTO BILD calculates the residual values in cooperation with vehicle valuation specialist Schwacke.
The analyst notes that Hertz (HTZ) may top Q3 consensus earnings and Avis Budget could miss based on his analysis of their respective pricing trends and residual values, but both have an added risk from reduced airport volume growth amid tightening competition among the ride hailing operators like Uber and Lyft.
As a result, the transaction continues to be sensitive to fluctuations in residual values. A material deterioration in vehicle values could potentially have a negative impact on the outstanding ratings.
ALG, the industry benchmark for residual values and depreciation data, has recognised the 2018 Dodge Charger and 2018 Jeep(R) Wrangler with a Residual Value Award.
The Civic has received a further boost with residual values predicted to be among the best in its class.
Future residual values determine the cost of several key factors of the acquisition process, such as leasing, contract hire and even renting the vehicle on holiday.
THE new Peugeot 308, due to hit the streets in January, will have among the highest residual values in its sector.
Hyundai has overtaken Toyota, Nissan, VW and Ford to take third place in ALG's 2012 mainstream brand residual value rankings, according to figures released this year by the North American car industry benchmark for residual values and depreciation data.
THE freshly upgraded Mazda3, which includes the debut of a low emissions 1.6-litre diesel Sport model, is expected to retain greater residual values say industry analysts.
The list, which deliberately excludes both exotica and cars sold in very small numbers, shows the residual values for vehicles on a '57' plate with an average mileage of 37,000.
However, as a new study by motoring magazine Auto Express has revealed, falling residual values are leaving many drivers facing negative equity on their vehicles.

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