For book purposes, the salvage value is always taken into account except when utilizing a declining balance method.(200% or 150%). The declining balance method uses a rate of depreciation that is a factor of the straight-line rate. Despite not using the salvage, the asset is never depreciated below it's salvage value.
In the United States, tax depreciation is governed by MACRS derived from the tax code.
When computing tax depreciation, the method utilized in most cases is 200% declining balance depreciated to zero. Tax also has other conventions that have to be considered in addition to the rates applied. Essentially, tax depreciation and it's requirements are governed by the Internal Revenue Code.
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Michael Henry
Controller
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Original Message:
Sent: 04-20-2021 03:57 PM
From: Raja Roy
Subject: Depreciation
Dear All
Hello
In calculating depreciable base, sometimes salvage value is subtracted from original cost, sometimes it is not deducted in some some books. I am in confusion. Is there any special rules for tax purpose regarding this calculation ?
Regards
Raja
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Raja Roy
Chief Financial Officer
Chittagong
Bangladesh
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