What is salvage value in depreciation?

[Verena]

Can someone explain salvage value in simple terms? How is it calculated, and why is it important when calculating depreciation?

 

[Kevin]

Salvage value is the estimated residual value of an asset at the end of its useful life. It represents what the asset can be sold for after depreciation. In accounting, it is subtracted from the asset’s cost to calculate total depreciable amount, helping determine periodic depreciation expense accurately.

 

[Blaise]

Salvage value (residual value) is the estimated amount an asset will be worth at the end of its useful life. In depreciation, it’s subtracted from the asset’s cost to determine the total amount that can be depreciated over time.