Jääkväärtusest

Jääkväärtusest is a Finnish term that translates to "residual value" or "salvage value" in English. It refers to the estimated worth of an asset at the end of its useful life. This value is important for accounting purposes, particularly in depreciation calculations. When an asset is acquired, its initial cost is depreciated over its expected lifespan. The residual value is the amount that is subtracted from the initial cost to determine the total depreciable amount.

For example, if a company buys a machine for $10,000 and expects it to have a residual value of $1,000 after 10 years, then the total amount to be depreciated is $9,000 ($10,000 - $1,000). This $9,000 would then be spread over the 10-year period using a chosen depreciation method.

Determining the residual value involves estimation and can be influenced by factors such as the asset's condition, market demand for used assets of that type, and technological obsolescence. In some cases, the residual value might be zero if the asset is expected to have no worth at the end of its useful life. Companies are generally required to make reasonable estimates for residual values, and these estimates are reviewed periodically. The concept is applicable to various types of assets, including vehicles, equipment, and buildings.