BUSINESS ADMINISTRATION
BUSINESS MATHEMATICS
Question
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Scrap value
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depreciation
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trade-in value
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book value
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Detailed explanation-1: -Scrap value is also known as residual value, salvage value, or break-up value. Scrap value is the estimated cost that a fixed asset can be sold for after factoring in full depreciation.
Detailed explanation-2: -The term ‘trade-in value’ refers to the reduction in the purchase price of a new asset brought about when it is purchased in return for cash plus the old asset as a trade-in; the term ‘salvage value’ refers to the net cash inflow generated by the sale of the old asset, whether for further use or for scrap.
Detailed explanation-3: -Salvage value is referred to as the estimated value of an asset at the end of its useful life on which it can be resold. Or it can be said as the book value of an asset after all the depreciation is accounted for.