What is the residual price?

The residual price is a concept that is used in different fields, such as accounting, leasing or renting. It refers to the estimated value of an asset at the end of its useful life, after deducting amortization and depreciation expenses.

For example, a company rents a printer through a 3-year lease. At the beginning of the contract, a residual price of €500 is agreed. If at the end of the contract, the company wishes to acquire the printer, it must pay an additional €500 to the lessor to become the owner of the equipment. If you choose not to buy it, you simply return the printer to the lessor at the end of the agreed term.

Related concepts

• Leasing contract