In computing depreciation, salvage value isa. the fair market value of a plant asset on the date of acquisition. b. subtracted from accumulated depreciation to determine the plant asset'sdepreciable cost. c. an estimate of a plant asset's value at the end of its useful life. d. ignored in all the depreciation methods.

Question

Conor Juarez

Business

22 May, 02:44

In computing depreciation, salvage value isa. the fair market value of a plant asset on the date of acquisition. b. subtracted from accumulated depreciation to determine the plant asset'sdepreciable cost. c. an estimate of a plant asset's value at the end of its useful life. d. ignored in all the depreciation methods.

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Juliana · Answer 1

c. an estimate of a plant asset's value at the end of its useful life

Explanation:

The salvage value or the residual value is the estimated value of the fixed asset which can be received at the end of its useful life. So, neither it is a fair market value of a plant asset, nor it is deducted from the accumulated depreciation.

The treatment of the residual value under the straight-line method or any other method is shown below:

The depreciation expense under the straight-line method is shown below:

= (Original cost - residual value) : estimated life in years

The residual value should always be deducted from the original cost of fixed asset