Question

Hello, please when calculating for salvage value, do you make use of depreciation expense or accumulated depreciation? thanks

Answer 1

Salvage value is the estimated selling value at the end of life of an asset. This amount is merely an estimation by the management. Generally it is estimated at not more than the 5% of cost of asset unless there is reasonable evidence provides otherwise.

To determine depreciable amount salvage value is reduced from the cost.

Depreciation expenses is current year depreciation charged as per the method adopted by the mgt like Straight line method or WDV method or double declaining method.

Accumulated depreciation is total amount of depreciation charged so far.