What is salvage value?
Salvage value is also known as Scrape Value.
Salvage value or Scrap Value is the estimated value of an asset after its useful life is over and therefore, cannot be used for its original purpose.
The value of machinery (any manufacturing machine, engineering machine, vehicles etc.) after its effective life of usage is known as Salvage value. In other words, when depreciation during the effective life of the machine is deducted from the Cost of machinery, we get the Salvage value.
Salvage value In Business Central
In Business Central, whenever we require any information related to Fixed Asset, we can directly go into the Fixed Asset Card. Where we can get all the information like – Book Value of Asset, Depreciation % and also the Salvage value for the Asset.
In the above image, in salvage Value field is showing blank.
In Business Central, we have to post salvage value through Fixed Asset Journal.
The formula for Salvage Value –
S = P – (I * Y)
Where,
- S = Salvage Value
- P = Original Price
- I = Yearly Depreciation Amount
- Y = Number of Years
SALVAGE VALUE FORMULA
- Engineering machinery costing INR 100,000 has a useful life of 7 years. The amount of depreciation is INR 10,000 / year. Calculate the Salvage value of the machinery after 7 years.
Salvage value is calculated given the Formula below
S = P – (I * Y)
- Salvage Value =INR 100,000 – (INR 10,000 * 7)
- Salvage Value =INR 100,000 – 70,000
- Salvage Value = INR 30,000
Therefore, the salvage value of the machinery after its effective life of usage is INR 30,000.
HOW WE CAN POST SALVAGE VALUE IN BUSINESS CENTRAL
After calculating the formula manually, now in the Business central, we can post the salvage value amount for the Fixed Asset through Fixed Asset Journal-
Our salvage value calculated amount is 30000 Rupees.
From Fixed Asset Journals, we can post the Salvage value amount for the Fixed Asset.
Earlier on the Fixed Asset Card page, the salvage value is showing blank.
After posting the salvage value for the Fixed Asset, the Salvage value of the fixed Asset is showing 30000 Rupees.
