Residual Value

Categories: Accounting

Actual residuals are, more or less, royalties paid to copyright, patent, or other intellectual property owners as the result of sales made by others. They're not the actual sale of the thing, like the record album (or rather, iTunes unit), but they're the "residue" from them. Sort of derrogatory, but hey, it's money, so we'll take it.

Residual value, technically, is the discounted cash flow valued stream of residuals due the licensor by the licensee of some intellectual property. But that's the technical def. The real, in-parlance def of the term is that there's "not much left" of old Bessie, the tractor stamping factory after 62 years. She's about ready to be melted to scrap and sold for radial tires and concrete pouring spines after the bosses sit shiva for 7 days. Her residual value will just be whatever she commands by the scrap metal buyer when he hauls her away to the great melting pot in the sky.

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Finance: What is a Residual Claim To Ass...2 Views

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Finance a la shmoop what is a residual claim to assets? alright people here's an

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investment and here's an investment gone bad well here's the result and you have [Cash burning]

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a claim to the crumbs of dollar bills here the investment in hair for days.com

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didn't go so well instead of regrowing hair as it promised

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it actually made hair disappear in you know other places so the investors eight

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million bucks is mostly gone Microsoft is buying the company for a

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scrap price of five million since you were the preferred stock investor and

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there was no debt junior or senior or otherwise no IRS bills owed no vendor

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bills owed just the preferred IEU well you have this residual claim to the you know

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financial residue and the eight million bucks you invested went to Jenny Craig [Man with briefcase of 8 million dollars appears]

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dieted down to only five million bucks which now come your way via your

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residual claim to assets fingers crossed your next investment goes a bit better

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but hopefully this one will put a little hair on your chest it happens [Man with hairy chest appears]

Find other enlightening terms in Shmoop Finance Genius Bar(f)