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Sagot :
As a result, the company would be responsible for $50,000 in taxes related to this project after five years.
What is salvage value?
After all depreciation has been properly expensed, the salvage value of an asset is its book value. The salvage value of an asset is determined by what a corporation anticipates getting in exchange for selling or dividing the asset after the end of its useful life. The amount that the object can be sold for when its useful life is up is its salvage value. The estimated value of an asset that is fixed at the end of its useful life or lease term is its residual value, which is often referred to as salvage value. The residual value is one of the lessor's main ways for calculating the amount of the lessee's periodic lease payments in lease agreements.
Why is salvage value important?
Determining the salvage value of an asset aids a company in planning its depreciation schedule. This schedule's identification is crucial for financial accounting departments' bookkeeping needs, including tax deductions and calculating how much an asset will increase or decrease cash flow.
Briefing:
Salvage Value = $200,000
Excepted Book Value=0
Excepted Life= 5 Year
Tax Rate= 25%
Now,
Gain over the book value = Salvage value - Expected book value
= $200,000 - 0
= $200,000
Taxes owed = Gain over the book value × Tax rate
= $200,000 × 25%
= $50,000
To know more about Salvage Value visit:
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