Correction
Estimate the amount expected from disposition at the end of the asset's useful life, net of supported removal and selling costs. Zero can be the supported answer when proceeds are immaterial or offset by costs. It remains an authored estimate.
The estimate affects depreciable amount and later gain or loss. It does not measure current fair value or guarantee the eventual disposal result.
How to avoid the mistake
Record the expected disposal channel, asset condition, comparable recoveries, removal obligations, selling costs, date, and evidence owner. Review the estimate when new information changes those inputs, and keep a later estimate change separate from an earlier error.
Where to watch
When this mistake may appear
- A depreciation template defaults every asset's salvage value to zero.
- Expected proceeds are discussed without expected removal or selling costs.
Check your work
Your work may contain this mistake if:
- Uses zero because it simplifies the calculation.
- Copies a prior estimate without reviewing the disposal channel.
- Calls gross expected proceeds the salvage value.