An old building. a cost of the purchased land should be reduced by the revenue from the sale of the salvaged items.
The cost of the asset is subtracted from the projected salvage value to get the asset's total depreciable value.
Salvage value, which is based on what a company anticipates getting in exchange for the asset after the end of its useful life, is the expected book value of an asset after depreciation is complete. The projected salvage value of an asset is therefore a crucial factor in determining a depreciation schedule.
To establish the overall depreciation over the item's useful life, the salvage value of an asset is deducted from its starting cost.
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