What is Salvage Value?

Salvage value is the amount we can obtain after selling an asset. It is the monetary value of the long-term assets after their useful life.

For example, we have a dairy company, and we purchased a cheese processing machine for eight years at $20,000, and in eight years, we can resale it at $ 8,000; here, $ 8,000 is the salvage value.

While calculating the salvage value, we must consider factors such as tax regulations, market demand, market price, etc. Also, we should use appropriate depreciation methods to calculate it.