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.

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.
References in periodicals archive ?
10 of which asserted that the service lives and salvage values of depreciable assets are in fact examples of accounting estimates that may require adjustments from time to time based upon an assessment of changing circumstances and the exercise of judgment by management "as more experience is acquired, or as additional information is obtained.
These include costs related to new production, product collection (includes logistics and buy-back costs), product disassembly, reassembly for remanufacturing, replacement part for remanufacturing, part salvage values (either material reclamation or part resale), and faulty part disposal cost.
Emphasis will also be placed on the ability to upgrade instrumentation or maintain equipment at leading-edge capability via other means, such as guaranteed trade-in or salvage values.
The proposed tax credit can alter the annual after-tax cash flows and salvage values of both types of cars.
Salvage values are not disclosed, but are presumably embodied within "sales of property, plant and equipment" in the Statement of Cash Flows.
To show higher net book values, salvage values in the 70% to 80% range, with a book life of 10 to 12 years, are not uncommon based on the make, model and onboard equipment.
Equipment salvage values were computed based on sales data of used equipment, as shown in Table IV.
Senchack, 1982, "The Case for Using Options to Evaluate Salvage Values in Financial Leases", Financial Management, 11:33-41
Many property adjusters are uncomfortable negotiating salvage values, purely due to lack of product knowledge and market value.
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.
SALVAGE VALUES (S) According to the original decree, United had to devise a plan to terminate outstanding leases and make the lease-only machines that were already in place available for sale.