How to Calculate Scrap Value of an Asset – SLM/WDV
Scrap value of an asset may be defined as the maximum value that can be fetched by salvaging or selling it after its useful life. It is also known as salvage value, residual value or break-up value.
To know how to calculate scrap value of an asset it is important to remember the below formula
How to Calculate Scrap Value of an Asset with SLM Depreciation
Unreal Corp. Pvt Ltd. purchases machinery worth 1,00,000
Cost of machine = 1,00,000 | Estimated life of the asset = 9 years | Depreciation (Straight Line Method) = 10% p.a
Depreciation year 1 = 10/100 * 1,00,000 = 10,000
Cost of asset after Year 1 = 1,00,000 – 10,000 = 90,000
Similarly total depreciation for 9 years = 10,000*9 = 90,000
To Calculate Scrap Value of an Asset = Cost of Asset – Total Depreciation
After 9 years scrap value = 1,00,000 – 90,000 = 10,000
Related Topic – More Assets Related Questions and Answers
How to Calculate Scrap Value of an Asset with WDV Depreciation
Written Down or Diminishing Balance Method
Using the same example as above, Unreal Corp. Pvt Ltd. purchases machinery worth 1,00,000
Cost of machine = 1,00,000 | Estimated life of the asset = 9 years | Depreciation (Written Down Value) = 10% p.a
Same formula is used to calculate scrap value of an asset whichever method of depreciation is used (SLM/WDV)
Scrap Value= 100000 – 61257.95 = 38742.05
Above examples should make it easy for anyone aspiring to learn how to calculate scrap value of an asset especially with the help of some examples.
>`Read What is Scrap Value of an Asset with Examples
