DEFINITION of Abandonment Value
Abandonment value is the value of a project or asset if it were immediately liquidated or sold. The abandonment value of an asset or project can vary for many reasons including liquidity, supply-demand factors and implied fair value appraisals performed by certified appraisers.
Also referred to as the liquidation value.
BREAKING DOWN Abandonment Value
The abandonment value is generally a cash value, or equivalent, associated with an asset. This value is important for executives when they analyze the profitability of particular projects or assets and decide whether they should be maintained or abandoned. Abandonment values are also an important factor in bankruptcy proceedings, where assets are typically sold at distressed or liquidation prices.