Salvage Value (Residual Value)

Definition: Salvage Value (also called Residual Value or Scrap Value) is the estimated amount a company expects to recover from an asset at the end of its usef…

Salvage Value (also called Residual Value or Scrap Value) is the estimated amount a company expects to recover from an asset at the end of its useful life, after deducting any costs of disposal. It is subtracted from the depreciable cost of an asset (Cost − Salvage Value) to determine the depreciable base under straight-line, sum-of-years'-digits, and units-of-production methods. Salvage value estimates are reviewed periodically and revised prospectively under ASC 360 and IAS 16.