Legal Definitions - salvage value

Definition: The value of an asset after it has become useless to the owner; the amount expected to be obtained when a fixed asset is disposed of at the end of its useful life.

Example: A company purchases a machine for $10,000 and estimates that it will have a useful life of 5 years. After 5 years, the machine is no longer useful and the company estimates that it can sell it for $1,000. The salvage value of the machine is $1,000.

This example illustrates how the salvage value is the amount that can be obtained when a fixed asset is disposed of at the end of its useful life. In this case, the machine has no more use to the company and they estimate that they can sell it for $1,000, which is the salvage value.