How surrendered warships counted toward reparations

How were warships used as reparations after one side surrendered?

Their scrap or service value was assessed and deducted from the defeated state's financial indemnity.

Transferred warships were not simply free additions to a victor's fleet. Negotiators could assign a value based on the ship's scrap return or usefulness in service. That amount then reduced the monetary reparations still owed by the defeated state. The method turned naval matériel into one component of a wider postwar financial settlement.