What is scrap value in accounting

Question

Accepted Answer

Scrap value in accounting refers to the residual value of an asset at the end of its useful life.

Scrap value is the amount that an asset can be sold for after it has been fully depreciated.
It is also known as salvage value or residual value.
Scrap value is used to calculate depreciation expense for an asset.
For example, if a company buys a machine for $10,000 and expects it to have a useful life of 5 years, the scrap value might be estimated at $1,000. This means that the company can depreciate the machine over 5 years, with an annual depreciation expense of $1,800 ($10,000 - $1,000 = $9,000 / 5 years = $1,800 per year).
Scrap value can also be used to determine whether it is more cost-effective to repair or replace an asset.
If the cost of repairing an asset exceeds its scrap value, it may be more economical to replace the asset instead.

Accepted Answer

Scrap value is an property at the end of the utility period without building dismantled

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