Accounting Dictionary - Letter R
is (1) a cost of an asset less all allowable depreciation (amortization) expenses. Residual value is an estimate and depends on the assumptions made about operations during a given period. Residual value is different from salvage (scrap) value, which equals proceeds less disposal costs of an asset. Salvage value implies that the usefulness of an asset has been reduced to zero. (2) Estimated market (fair) value of the leased asset at the end of the lease term. In this case residual value can be either guaranteed or unguaranteed.
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