Wasting Asset


DEFINITION of 'Wasting Asset'

An item that irreversibly declines in value, as a function of time. Wasting assets include vehicles, machinery and other fixed assets. Accountants attempt to quantify the amount that assets decrease in value over time, by assigning depreciation schedules to wasting assets, therefore, recognizing the decrease in value each year.

BREAKING DOWN 'Wasting Asset'

In investing, options are the most common type of wasting asset. An option's value has two components: a time value and an intrinsic value. As the option's expiration date nears, the time value of the option gradually declines to zero. At expiration, an option is worth only its intrinsic value. Nonetheless, wasting assets are usually of a physical nature and experience price erosions as time passes.

  1. Theta

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  2. Derivative

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  3. Wasting Trust

    A trust that holds plan assets when a qualified plan is frozen. ...
  4. Option

    A financial derivative that represents a contract sold by one ...
  5. Time Decay

    The ratio of the change in an option's price to the decrease ...
  6. Expiration Date (Derivatives)

    The last day that an options or futures contract is valid. When ...
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