Define "liquidation values" in the context of leasing.

Liquidation values in the context of leasing refer to the estimated selling price of an asset during a termination event. This concept is crucial for both lessors and lessees, as it determines how much value can be recuperated from the asset if a lease is terminated early or if the asset is repossessed. Understanding the liquidation value helps parties assess potential financial losses and make informed decisions about leasing arrangements.

The estimated selling price is typically derived from market conditions, the asset's condition at the time of termination, and its remaining useful life. This value holds importance in risk assessment and financial planning for leasing transactions.

In contrast, the projected value of the asset when fully operational focuses on the asset's performance and utility rather than its resale potential during a termination event. Maintenance costs pertain to ongoing expenses associated with keeping the asset functional, not its value in a liquidation scenario. The original purchase price reflects the initial investment in the asset, which may not accurately represent its current market value at the time of liquidation. Thus, the focus on the estimated selling price during a termination gives best insight into liquidation values in leasing.