Salvage value of an asset is considered for a depreciation expense, with the estimated amount frequently becomes zero. Refer the below two salvage value example problems which help you to calculate the value of a salvage of a company.
Let us consider the problem: A company buys a machine at a cost of Rs. 7000 and that the machine has a depreciation rate of 6% and a useful life for 6 years.
We can calculate the Salvage Value using the given formula.
Substituting the values in the formula,
Value of Salvage = 7000 ( 1 – 6 )6 = 4829.09
Therefore, a company has a salvage value of 4829.09
Let us consider the salvage value sample problem of a company who purchases a delivery car for $15000 and estimates its useful life to be 5 years with the depreciation rate of 7%. What would be the salvage value?
Substituting the values in the formula,
Salvage Value = 15000(1-7)5 = 10435.33
Therefore, Salvage value of a company is 10435.33
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