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 SAB also states that depreciable lives, amortization periods, and salvage values of long-lived assets need to be reviewed and, where appropriate, changed on a timely basis.
"We call this stuff 'deluxe junk.' There's a lot of innuendo going on and it's hard to determine what the real salvage values are.
For the same asset, the use of straight line depreciation, higher salvage values or longer useful lives will result in higher carrying values and thus increased probability of recognizable impairment losses.
Any material gains and losses under consideration for reporting, however, should be closely analyzed to determine if they are either the result of 1) improper estimates that were biased or not based upon reasonable assumptions and the best information available at the time they were made or last adjusted (and therefore constitute errors, the correction of which require presentation under GAAP as prior period adjustments pursuant to ASC 250-1045-24) or 2) current changes in estimated lives or salvage values attributable to changes in circumstances that should be accounted for either currently or prospectively as a change in estimate, with all required disclosures, pursuant to ASC 250-10-45-17 and 250-1050-4.
In the presence of multiple optima, the global optimum is determined by substituting the salvage values in Equation (3) to determine which one provides the highest NPV.
He has an enormous spreadsheet showing a materials movement schedule, operating costs for each bench, processing costs and recoveries for each ore type, tax and royalty allowances, capital depreciation allowance, salvage values and any other specific cost/revenue items for the project.
The fact that Hanover's expert was able to estimate damages based on a conceptually incorrect measure indicates the presence of errors in his estimates of machinery prices, maintenance costs, and salvage values.
(b) The Same Boat Effect: when other economic agents are simultaneously attempting to sell off similar investments and are driving down salvage values (e.g., selling off ancillary infrastructure, buildings, houses, etc., when the mine closes).
When the manufacturer has the liquidation advantage (i.e., [s.sub.R] [less than or equal to] [s.sub.M] - [t.sub.R] - [t.sub.M]), we already possess a channel policy that Pareto-dominates any other, provided that handling costs and salvage values are properly acknowledged (cf.
Northcutt, argued that the impairment losses should be handled as changes in accounting estimates and recorded through revisions in the depreciation rates by adjusting the useful lives and salvage values of assets prospectively.
The program tracks all of your important information, including purchase dates, model numbers, serial numbers, manufacturer information, purchase prices, and salvage values. With five user-defined fields and a free-format notes field, you can quickly structure your inventory records to fit your business needs.