Salvage Value Effect On Depreciation

This question tests your understanding of how fixed assets are depreciated and how accounting assumptions affect the expense recorded each period. Candidates need to know the role of salvage value in determining the depreciable base, why it is subtracted from historical cost, and how that feeds into straight line depreciation and related tax effects. Interviewers ask this because depreciation is a core accounting concept that affects the income statement, cash flow presentation, and valuation analysis, so bankers expect you to explain the mechanics clearly and connect them to financial reporting and tax treatment.