Salvage Value And Book Value Formula

Net book value original asset cost accumulated depreciation.

Salvage value and book value formula. S salvage value b book value over a period of time p present amount or worth n total estimated life of an asset t number of years of the asset. Salvage value inr nil. 100 initial investment 10 scrap value 40 working capital 2 150 m 2 75m.

The company estimates that the computer s useful life is 4 years. Salvage value formula p 1 i y 1 million 1 0 20 20 1 million 0 8 20 11 529 22 what if the salvage value of any asset is zero. S b p n t p.

Sample calculation of net book value. Therefore the salvage value of the machinery after its effective life of usage is nil. For example company a purchases a computer for 1 000.

Accumulated depreciation per year depreciation x total number of years. The salvage value of an asset is based on what a company expects to receive in exchange for selling or. It means that the computer will be used by company a for 4 years and then sold afterward.

The formula for salvage value s p i y engineering machinery costing inr 100 000 has a useful life of 7 years. If it is too difficult to determine a salvage value or if the salvage value is expected to be minimal then it is not necessary to include a salvage value in depreciation calculations. Calculating net book value.

When it reaches the end of its useful life the nbv should be equal to its salvage value. The estimated salvage value is deducted from the cost of the asset to determine the total amount that is depreciable on an asset. Salvage value actually tries to capture the remaining scrap of a particular machine after its useful life of usage.