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 ?
All in all, Rice's failure to seriously evaluate the likely residual value of the computer, its willingness to pay an inflated purchase
Vehicle quality, production levels relative to demand and pricing and marketing strategies represent key factors that impact ALG's residual value forecasts.
Vehicle quality, production levels relative to demand, and pricing and marketing strategies represent key factors that impact ALG s residual value forecasts.
In the compact car segment, Hyundai's Elantra model, which is also the current North American Car of the Year, topped the chart with the highest residual value of all.
INDUSTRY analysts and major leasing firms are predicting trend-busting improvements in residual values for Saab.
These hi-tech options play an important role in seducing potential buyers of new prestige-brand cars, but weak residual values suggests that used car buyers remain unconvinced," said Richard Crosthwaite, editor of Prestige Car.
Ian Hughes, Citron's head of fleet and remarketing, comments: "The independent price guide residual value figures indicate that new Relay's residual values will be around 55% above the model it replaces.
The car value experts say that manufacturers have made significant strides in improving the residual values of their cars to the point where they often rival or even outperform volume brands including Ford, Volkswagen and Renault.
It is important the car also keeps its residual value against its two main rivals, the BMW 3 Series and the Mercedes C Class.
Their vehicle's period of maximum prestige or image is reduced to mere months beforethe next year's registration plate is introduced, ``ageing'' the car prematurely and hitting its residual value hard.
The discounted cash flow, or DCF technique, considers two factors: income over the holding period or cash flow and the residual value of the property or future sale price.
Several states have recognized the need for lowered residual values for computer hardware and related peripherals; for example, Michigan lowered the residual value for computers to 10% (down from 30%).