Salvage Value
Accounting glossary · Understand, connect, apply
Salvage value, or residual value, is the estimated amount recoverable from disposing of an asset at the end of its useful life after relevant disposal costs, as defined by the applicable framework.
Example
A $6,000 asset with an estimated $500 residual value has a $5,500 depreciable amount when cost is the relevant basis.
Remember the difference
Residual value is an estimate, not guaranteed proceeds. It may need review as expectations change.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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