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.

RELATED TERMS
  1. Time Value

    The portion of an option's premium that is attributable to the ...
  2. Time Decay

    The ratio of the change in an option's price to the decrease ...
  3. Carrying Value

    An accounting measure of value, where the value of an asset or ...
  4. Relative Value

    A method of determining an asset's value that takes into account ...
  5. Appreciation

    An increase in the value of an asset over time. The increase ...
  6. Intrinsic Value

    Intrinsic value is the actual value of a company or an asset ...
Related Articles
  1. Markets

    Waste Management Stock To Trade Ex-Dividend (WM)

    Waste Management will send its dividend payment on June 17 to shareholders of record as of June 3.
  2. Managing Wealth

    3 Waste Management Stocks That Outperformed Since 2010

    A look at three stocks in the environmental and waste management industry that have outperformed the market for the last five years.
  3. Trading

    What Drives An Option's Price?

    The primary drivers of an option’s price are the underlying stock’s current price, the option’s intrinsic value, its time to expiration and volatility.
  4. Investing

    What Is Option Moneyness?

    Get the basics under your cap before you get into the game.
  5. Investing

    Understanding Carrying Value

    Carrying value is the value of an asset as listed on a company’s balance sheet. Carrying value is the same as book value.
  6. Markets

    Getting A Handle On The Options Premium

    The price of an option, otherwise known as the premium, has two basic components: the intrinsic value and the time value. Understanding these factors better can help the trader discern which ...
  7. ETFs & Mutual Funds

    Top 5 Mutual Fund Holders of Waste Management (WM, AMECX)

    Discover which mutual funds own the largest positions in Waste Management, and learn about the investment style and strategy of each of those funds.
  8. Managing Wealth

    What's an Asset?

    An asset is a resource with economic value.
  9. Investing

    The Difference Between Book and Market Value

    Book value is the price paid for an asset. It never changes as long as the asset is owned. Market value is the current price at which the asset can sell.
  10. Personal Finance

    Assessing Bank Assets: Are Your Savings Safe?

    Learn how to determine if your assets are safe or if your bank has spread itself too thin.
RELATED FAQS
  1. What is the difference between carrying value and market value?

    Understand the difference between carrying value and market value. Learn when a company uses carrying value to value an asset ... Read Answer >>
  2. What role does intrinsic value play in call options?

    Understand why the concept of intrinsic value is important for options traders and how they can use it to estimate what a ... Read Answer >>
  3. What can cause an asset to trade above its market value?

    Learn some of the factors that can affect the price of an investment asset and the major reasons why an asset might trade ... Read Answer >>
  4. How do you account for changes in the market value of various fixed assets?

    Understand how to account for changes in the fair market value of a company's fixed assets. Learn what accounting methods ... Read Answer >>
  5. What role does intrinsic value play in put options?

    See why the concept of intrinsic value is so important in options trading and how investors use it to evaluate the worth ... Read Answer >>
  6. What can cause an asset to trade below its market value?

    Understand how market price can differ from actual fair value, and the reasons that an investment asset might trade below ... Read Answer >>
Hot Definitions
  1. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center