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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.


seriously defective or damaged components or products that are rejected by a firm's QUALITY CONTROL system as incapable of being rectified and which have to be disposed of for the salvage value of their materials.
References in periodicals archive ?
While the company has encountered significant challenges in its attempt to win over a skeptical population with the benefits of a ship scrapping operation, for Bay Bridge, having easier access to a West Coast fleet of ships makes it worth the effort.
However, locating a facility on the West Coast would sharply reduce many of the expenses associated with ship scrapping, including towing.
While there are plenty of MARAD vessels that are in need of scrapping, there also are a number of privately owned vessels, including tug boats, barges and other ocean-going vessels, that have outlived their usefulness and are in need of scrapping.