The residual value (also called salvage value) and the useful life of the asset are estimations. The company should estimate the cash value of the asset at the end of its useful life. In other words, residual value is the amount that the company will receive when it is sold at the end of its useful life. By considering together, the company will find out the depreciable cost of the asset. Depreciable cost is the cost when residual value is subtracted from capitalized cost of the asset. The correct answer is E.