Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important component in the calculation of a depreciation schedule. |
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KEY TAKEAWAYS
- Salvage value is the book value of an asset after all depreciation has been fully expensed.
- The salvage value of an asset is based on what a company expects to receive in exchange for selling or parting out the asset at the end of its useful life.
- Companies may depreciate their assets fully to $0 because the salvage value is so minimal.
- Salvage value will influence the total depreciable amount a company uses in its depreciation schedule.
Overview
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