Salvage Value. Salvage value is an estimate of the remaining value of an investment at the end of its useful life.
For farm machinery (tractors and implements) the remaining value is a percentage of the new cost of the
investment (Boehlje and Eidman). The percent remaining value is calculated from equations developed by the
American Society of Agricultural Engineers (ASAE) based on equipment type and years of life. The life in
years is estimated by dividing the wear out life, as given by ASAE by the annual hours of use in this operation.
For other investments including irrigation systems, buildings, and miscellaneous equipment, the value at the end
of its useful life is zero. The salvage value for land is the purchase price because land does not depreciate.