What is a 'Legacy Asset'

A legacy asset is an asset that has been on the company's books for a long period of time. A legacy asset has generally decreased in value to the point of a loss for the company. This decrease in value can be due to obsolescence if the company manufactures consumer goods such as electronics. Financial companies may experience legacy assets in the form of investments that have lost their value or loans that will not be collected and so have been characterized as bad debt. The term "legacy assets" comes from the literal meaning of outdated or obsolete.

BREAKING DOWN 'Legacy Asset'

Legacy assets often have no value to the company and have been written down for a loss. However, at times it is possible that they may have new value in a different time or economy. Items that are old can become collector's items and be assigned value for their nostalgic qualities or because they are rare.

Example of Legacy Assets

For example, XYZ Music has been in business since the 1920s and has always kept extra recording and music playing equipment in its warehouse. Old gramophones, turntables and 8-track players haven't quite held onto their value throughout the ages, so they are held on the books as legacy assets. Occasionally, XYZ Music will donate an old piece of equipment to a museum or local theater company for a production. When vinyl came back into fashion around 2010, they saw an uptick in the demand for vintage turntables and were able to sell a number of their legacy assets due to the shift in consumer tastes.

  1. Public-Private Investment Program ...

    The Public-Private Investment Program for Legacy Assets is a ...
  2. Functional Obsolescence

    Functional obsolescence is a reduction of an object's usefulness ...
  3. Obsolescence Risk

    Obsolescence risk is the risk that a process or product used ...
  4. Liquidation Value

    Liquidation value is the total worth of a company's physical ...
  5. Asset

    An asset is a resource with economic value that an individual ...
  6. Fixed Asset

    A fixed asset is a long-term tangible piece of property that ...
Related Articles
  1. Investing

    Legacy Looks to New Partnership for Capital (LGCY)

    Legacy Reserves is entering into a new master limited partnership in order to raise cash, but the move comes with big risk.
  2. Insights

    Legacy a 'Strong Buy' after Robust 3Q (LGCY)

    Legacy Reserves was upgraded by multiple analysts after a strong third quarter and an upbeat CEO call to investors.
  3. Personal Finance

    Your Legacy: Tangible and Intangible Wealth

    Passing on your legacy is just as important as transferring wealth to heirs. Consider engaging in these activities to successfully pass on your legacy.
  4. Investing

    Book Value: How Reliable Is It For Investors?

    In theory, a low P/B ratio means you have a cushion against poor performance. In practice, it is much less certain.
  5. Retirement

    The New Way to Leave a Lasting Legacy

    Following these steps can help you leave a lasting legacy that reflects your values and goals.
  6. Investing

    Rivals Alibaba, Tencent Ink Music Licensing Deal

    Chinese rivals Alibaba and Tencent have inked a deal to license music content to each other.
  7. Investing

    HPE and Nokia Expand IoT Partnership (HPE)

    The legacy tech company and telecomm giant expand IoT capabilities targeted at smart city and manufacturing markets set to be worth $161 billion by 2020.
  8. Investing

    Deep Discount-To-Book Value Stocks

    With the right company, buying at a discount-to-book value could prove fruitful.
  9. Investing

    Mark-To-Market Mayhem

    Did this accounting convention contribute to the credit crisis of 2008? Find out here.
  10. Investing

    Amazon Touts Alexa's Music Playing Capability

    CEO Jeff Bezos told Billboard about the benefits of playing music from Amazon's streaming service on its speakers.
  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. How Are Book Value and Intrinsic Value Different?

    Book value and intrinsic value are two ways to measure the value of a company. Find out which is known as the true value ... Read Answer >>
  3. How do fixed assets and current assets differ?

    Current assets can be converted into cash in less than one year, while fixed assets are long-term physical assets. Read Answer >>
Trading Center