What does salvage value refer to in financial terms?

Salvage value refers to the estimated residual value that an asset is expected to have at the end of its useful life. In financial terms, this is significant because it directly relates to the valuation of assets and how they are depreciated over time.

The correct answer highlights that market value may not equal book value, which is especially important when assessing the expected remaining value of an asset after depreciation. The book value reflects the original cost of the asset minus accumulated depreciation, while the market value is determined by what the asset could be sold for in the current market. Over time, due to various factors such as market demand, wear and tear, and changes in technology, these values can diverge, making it necessary to recognize that the salvage value does not conform strictly to either the book or the market value at the end of an asset's useful life.

In contrast, the other options present incomplete or inaccurate representations of asset valuation. Salvage value does not imply that book value is always greater than market value or that it specifically relates to intangible assets. Understanding the nuances of these terms helps in financial decision-making, especially concerning asset valuation, depreciation, and investment returns.