What represents the residual value in depreciation calculations?

The correct choice, which is the estimated value at the end of useful life, accurately reflects the concept of residual value in depreciation calculations. Residual value, also known as salvage value, is an important factor in determining how much an asset will be worth when it is no longer useful or at the end of its useful life. This value is essentially an estimate of what the asset can be sold for after it has been fully depreciated.

In practical terms, this figure helps businesses calculate the total period depreciation by allowing them to subtract the residual value from the asset's initial cost to determine the amount that will be depreciated over the asset's lifespan. For example, if a piece of equipment is purchased for $10,000 and is expected to have a residual value of $2,000 after five years, only $8,000 would be depreciated over that time period.

The other options consider aspects of asset valuation but do not correctly define residual value. The value after depreciation is applied would vary based on the method of depreciation used, while initial cost without depreciation simply refers to the asset’s purchase price. The market value at purchase may fluctuate and does not specifically reflect residual value, which is based on an estimate of future worth rather than present market conditions