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What is the difference between residual value, salvage value, and scrap value?

Author:
Harold Averkamp, CPA, MBA

The terms residual value, salvage value, and scrap value are often used when referring to the estimated value that is expected at the end of the useful life of the property, plant and equipment used in a business. This estimated amount is used to calculate the asset’s depreciation expense and it is often assumed to be zero.

The term residual value may have other uses as well. For example, it is used when discussing leased assets.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

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