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Short note: Scrap value and salvage value

Short answer

Scrap value is the value of dismantled materials sold as junk, typically about 10% of cost. Salvage value is the value of the asset as a whole at the end of its useful life without dismantling, usually higher. Both are used in depreciation calculations.

Write a short note on scrap value and salvage value.

Scrap value

Scrap value is the value of the materials obtained when a structure or machine is dismantled at the end of its life, valued at the rate at which they sell as junk or waste (for example old steel, bricks, timber, doors and windows, with no further use as a building). It is generally a small percentage of the original cost; for buildings it is commonly assumed to be about 10%.

Salvage value

Salvage value is the value of a property at the end of its useful life without being dismantled, because it can still be used or sold in its present form (for example an old machine, or an old building that can be used for some other purpose). It is generally higher than the scrap value, because the asset is not broken down.

PointScrap valueSalvage value
ConditionAfter dismantling the structureWithout dismantling, in its existing form
Value ofMaterials onlyThe asset as a whole
AmountLowerHigher
ExampleSteel and bricks from a demolished buildingAn old usable building sold as it stands

Both are used in depreciation calculations: depreciable amount = cost − (scrap or salvage value). In valuation problems, the scrap value of buildings and machines is often taken as about 10% of the cost unless stated otherwise.

✓ Answer checked by Claude Opus 5.5 (high effort)

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