Residual value is the estimated net amount that will be received when the asset is removed from service. Residual value is defined as “the net amount that the entity expects to obtain for an asset at the end of its useful life after deducting the costs of disposal, to the extent that such costs have not been capitalised as part of the cost of the asset. Buildings are generally regarded to have a nil residual value. Where it is considered that a building residual value is appropriate, the Valuer is to disclose the reasoning and assumptions. Residual values for plant and equipment are to be based on the experience of the Valuer obtained whilst valuing similar assets; and the experience of the company in terms of the level of net costs achieved when disposing of such assets, and will usually be expressed as a percentage of ORC.
