Question

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.

Answer 1

Answer:

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