Salvage Value

Posted in Finance, Accounting and Economics Terms, Total Reads: 940
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Definition: Salvage Value

Salvage Value is the value of an asset that a company realizes on selling of the asset after its useful life. Salvage value is used to calculate the per year depreciation value of the asset which is reported in the balance sheet.

Salvage value can be determined by assuming the resale/ market value at the end of the useful life.

Example:

Company A has bought a machine of Rs.10,000 which is having an useful life of 5 years, at the end of which the machine can be sold at Rs.5000.

For this particular machine the salvage value is Rs. 5000.





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