Define: Abandonment

UK Accounting Glossary

Definition: Abandonment


Quick Summary of Abandonment


The act of abandoning something or someone.




What is the dictionary definition of Abandonment?

Dictionary Definition


1. Voluntary disclaim of a right or interest (without transferring it to anyone else) in a property, accompanied by a clear act of abandoning that property. Such acts include continuous lack of use and/or maintenance, and failure to pay property taxes. The abandoned property may then be claimed by an occupier (see adverse possession) or may be appropriated by the state. However, obligations (debts, liens, taxes) associated with a property are not discharged when it is abandoned and remain the liability of the owner.
2. Donation or voluntary disposal of a business asset where it is cheaper to abandon the asset than to restore or salvage it.

The book value of an abandoned asset is written off as a loss.
3. Expiration of an option instead of its exercise or sale.
4. Right of the owner of insured property to abandon it (1) where its loss cannot be avoided (called actual total loss), or (2) where the cost of repairing the damage exceeds its value (called constructive total loss). The insured party can still claim full settlement from the insurer (who becomes the owner of the abandoned property), after serving the notice of abandonment subject to the conditions of the insurance policy. Most non-marine insurance policies (such as homeowners insurance policy), however, specifically prohibit abandonment of the insured property under any circumstance.


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Full Definition of Abandonment


This refers to the act of giving up the ownership of something covered by an insurance policy and treating it as if it has been completely lost or destroyed. If the insurers agree to abandonment, they will pay a total-loss claim.

This often occurs in Marine Insurance is a vessel has run aground in treacherous waters and the cost of the recovering said vessel would be greater than the cost of the vessel and all its cargo.

Abandonment is a viable option in such an instance as it’s simply not financially viable to try and recover the vessel.

Abandonment also occurs during Wartime; when a vessel is captured by the enemy.

If the owner wishes to declare a vessel (including its cargo) a total loss, then a notice of abandonment is given to the Insurer.

If subsequently, the vessel and/or its cargo are recovered at a later date, they then become the property of the insurer.

 

 


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Abandonment FAQ's


What is legally considered abandonment?

In law, abandonment is the relinquishment, giving up or renunciation of an interest, claim, civil proceedings, appeal, privilege, possession, or right, especially with the intent of never again resuming or reasserting it. Such intentional action may take the form of discontinuance or a waiver.


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https://payrollheaven.com/define/abandonment/
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Abandonment. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. November 18, 2019 https://payrollheaven.com/define/abandonment/.
Chicago Manual of Style (CMS):
Abandonment. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/abandonment/ (accessed: November 18, 2019).
American Psychological Association (APA):
Abandonment. PayrollHeaven.com. Retrieved November 18, 2019, from PayrollHeaven.com website: https://payrollheaven.com/define/abandonment/

Definition Sources


Definitions for Abandonment are sourced/syndicated from:


This glossary post was last updated: 13th August 2019.