If the Salvage Value, at the Time of an Asset

question 77

True/False

If the salvage value, at the time of an asset disposition, is less than the book value of the asset, then the firm will effectively receive a positive cash flow from taxes on the sale.

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Definitions:

Stockholders' Equity

The owners' residual interest in a corporation, calculated as the difference between the company's total assets and total liabilities.

Par Value

The face value of a bond or stock as stated by the issuer, which does not necessarily reflect its market value.

Redemption Value

The amount that an investment instrument, such as a bond, is worth at its maturity or when it is redeemed.

Stated Value

Arbitrary value placed by the board of directors on each share of no-par stock to fulfill legal capital requirements.