Does the factor of a residual value make sense to you? Should all assets have a residual factor or just some?© BrainMass Inc. brainmass.com June 3, 2020, 7:05 pm ad1c9bdddf
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Amortization is a method of cost allocation. Assets value decreases with the passage of time. The value changes from the date of its purchase to the date of actual sale or the date when the asset is scrapped. Therefore the estimated scrap value or residual value is considered while determining the periodical charge of amortization. Assets cost less its salvage or residual value is allocated to the period of its estimated life for which it provides service. In fact amortization is a function of two important factors.
1 Acquisition cost of an asset
2 Residual Values
Residual value is defined as the amount which is expected to be realized from the disposal of an asset at the end of its useful life. Residual ...
This posting helps with an accounting problem. It helps explain the factor of a residual value and whether all assets should have a residual factor. The tutorial is 483 words. No references.