---
title: "Short note: Scrap value and salvage value"
subject: "Construction Management"
chapter: 13
key: "semester_8/construction_management:scrap-salvage-value-note"
source: https://www.bctengineer.com/q/semester_8/construction_management/scrap-salvage-value-note
site: BCT Engineering
---

# Short note: Scrap value and salvage value

Construction Management · Chapter 13: Valuation

- Asked in: 2075 Bhadra, 3 marks
- Video: [Salvage Value & Wear and Tear Explained with EXAMPLES | CAPITAL BUDGETING](https://www.youtube.com/watch?v=INDwk15EyoE) — Counttuts
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_8/construction_management/scrap-salvage-value-note
- Whole chapter: https://www.bctengineer.com/md/semester_8/construction_management/chapter-13

## Question

Write a short note on 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.

## Answer

#### 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.

| Point | Scrap value | Salvage value |
|---|---|---|
| Condition | After dismantling the structure | Without dismantling, in its existing form |
| Value of | Materials only | The asset as a whole |
| Amount | Lower | Higher |
| Example | Steel and bricks from a demolished building | An 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.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. What is scrap value?
   A. Value of the asset as a whole in present form
   B. Original cost
   C. Value of materials obtained after dismantling at end of life
   D. Land value
   Answer: C. Scrap value is that of dismantled materials sold as junk. (Key point: Scrap value)

2. What is salvage value?
   A. Value of property at end of life without dismantling, still usable
   B. Value after complete demolition
   C. Cost of construction
   D. Rent
   Answer: A. Salvage value is for the asset as it stands and is generally higher than scrap. (Key point: Salvage value)

3. How is scrap or salvage value used?
   A. Depreciable amount = cost + scrap value
   B. Added to the rent
   C. Depreciable amount = cost - scrap/salvage value
   D. Ignored
   Answer: C. The depreciable amount is cost less the end-of-life value, usually 10% of cost. (Key point: Use in depreciation)

## Related in Construction Management

- [Fair market value of Tata Sipradi showroom](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Avalue-tata-sipradi-showroom) — Construction Management, chapter 13
- [Valuation of a cinema hall (land Rs 15 lakh)](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Avalue-cinema-hall-2077) — Construction Management, chapter 13, asked 2×
- [Valuation of a cinema hall (land Rs 5 crore)](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Avalue-cinema-hall-2070-magh) — Construction Management, chapter 13

## Related in other subjects

- [Book value by SOYD and sinking fund](https://www.bctengineer.com/question.md?key=semester_6%2Fengineering_economics%3Abook-value-soyd-sinking-fund) — Engineering Economics, chapter 7
- [Depreciation and book value by four methods](https://www.bctengineer.com/question.md?key=semester_6%2Fengineering_economics%3Adepreciation-sl-db-soyd-sf-7000) — Engineering Economics, chapter 7