Question

An asset’s worth at the end of its useful life is referred to as its:

a. none of the available choices

b. historical cost

c. unamortized value

d. salvage or residual value

Answer 1

The Answer is “ D. Salvage or Residual Value”

- An asset’s worth at the end of its useful life is referred to as its salvage or residual value

- The term Salvage value or Residual value means the expected value of an asset at the end of it’s useful life or the life of the asset

- The Salvage value or Residual value are used in determining the Asset’s Depreciation expense

- The Salvage value or Residual value are also referred to as the Scrap Value

- It’s an Accounting tool used in determining the Depreciation Expense of an asset under various Depreciation methods such as Straight Line Depreciation Method, Double declining depreciation method, Units of production or units of activity method and the Sum of years digits method.