6.11 An asset's residual value or liability at the end of the appraisal period should be included to reflect its opportunity cost. Residual values do not depend on the actual sale of an asset. The market price at the end of the asset's lifetime - the best value obtainable from its sale, lease or alternative use - is part of the value created as a result of the cost to the public sector of creating the asset.
6.12 Contingent liabilities - potential future expenditure if certain events occur - should be appraised and included as part of the expected cost of risk. They sometimes result from decisions that do not involve direct public expenditure. One example of a contingent liability is the cancellation costs if a public sector organisation terminates a contract prematurely. The HM Treasury contingent liability approval framework provides further discussion on calculating expected costs.
6.13 Depreciation is not included in the estimate of NPSV, although it is included in the estimate of public sector costs in financial analysis. Depreciation is used in accounting to spread an allowance for loss in value of an asset over its lifetime. In calculating NPSV, costs are not spread over time but register when total costs are reflected in the accounts.