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Simple English definitions for legal terms
salvage value
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A quick definition of salvage value:
Salvage value is the amount of money you can get for something when it's no longer useful to you. For example, if you have a car that's too old to drive, you might sell it for its salvage value. This value is used to determine how much you can deduct for depreciation on your taxes. It's also used in some contracts to determine what happens when something is no longer needed.A more thorough explanation:
Definition: The value of an asset after it has become useless to the owner; the amount expected to be obtained when a fixed asset is disposed of at the end of its useful life.
Example: A company purchases a machine for $10,000 and estimates that it will have a useful life of 5 years. After 5 years, the machine is no longer useful and the company estimates that it can sell it for $1,000. The salvage value of the machine is $1,000.
This example illustrates how the salvage value is the amount that can be obtained when a fixed asset is disposed of at the end of its useful life. In this case, the machine has no more use to the company and they estimate that they can sell it for $1,000, which is the salvage value.