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 The term "legacy assets" comes from the literal meaning of outdated or obsolete.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 ...

    A program designed as a result of the implementation of the trouble ...
  2. Book Value

    1. The value at which an asset is carried on a balance sheet. ...
  3. Functional Obsolescence

    A reduction in the usefulness or desirability of an object because ...
  4. Obsolescence Risk

    Obsolescence risk is the risk that a process or product used ...
  5. Fixed Asset

    A fixed asset is a long-term tangible piece of property that ...
  6. Trading Assets

    Trading assets are a collection of securities held by a firm ...
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. 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.
  4. Investing

    Sony Resumes Vinyl Record Production After Nearly 3 Decades

    Sony Corp. is going retro, bringing back vinyl records 28 years after the Japanese entertainment company stopped making them.
  5. Managing Wealth

    What Is the Most Important Financial Lesson?

    When it comes to learning lessons about your finances, it helps to think about the future.
  6. Investing

    Streaming Music Sales to Surpass CDs This Year

    A new PwC reports that streaming will surpass physical CD sales for the first time this year.
  7. Investing

    Rivals Alibaba, Tencent Ink Music Licensing Deal

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

    Mark-To-Market Mayhem

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

    Sony’s YouTube Music Deal Is Major Win: Jefferies

    Analysts expect shares of the Japanese conglomerate to gain another 35% on its music business.
  1. What's the difference between book and market value?

    Book value is the price paid for a particular asset. On the other hand, market value is the current price at which you can ... Read Answer >>
  2. Are stocks real assets?

    Learn why stocks are classified as financial assets, not real assets. Understand the properties that determine whether an ... Read Answer >>
  3. Why is market to market (MTM) accounting considered controversial?

    Understand why mark to market accounting has been a major point of controversy because it requires all assets to be valued ... Read Answer >>
Hot Definitions
  1. Treasury Yield

    Treasury yield is the return on investment, expressed as a percentage, on the U.S. government's debt obligations.
  2. Return on Assets - ROA

    Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets.
  3. Fibonacci Retracement

    A term used in technical analysis that refers to areas of support (price stops going lower) or resistance (price stops going ...
  4. Ethereum

    Ethereum is a decentralized software platform that enables SmartContracts and Distributed Applications (ĐApps) to be built ...
  5. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  6. Financial Industry Regulatory Authority - FINRA

    A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's ...
Trading Center