Book Value Accounting Definition

Finding the nav involves subtracting the company s short and long term liabilities from its assets to find net assets.

Book value accounting definition. For example if you bought. The book value of a company is the amount of owner s or stockholders equity. Then you d divide the net assets by the number of shares of common stock preferred stock or bonds to get the nav per share or per bond.

Net book value nbv represents the carrying value of assets reported on the balance sheet and is calculated by subtracting accumulated depreciation from the original purchase cost of the asset. The book values of assets are routinely compared to market values as part of various financial analyses. It is important to realize that the book value is not the same as the fair market value because of the accountants historical cost principle and matching principle.

The book value of an asset is the amount of cost in its asset account less the accumulated depreciation applicable to the asset. The book value of an asset is an accounting calculation that measures the impact of depreciation on an asset s value. Home accounting dictionary what is book value.

Book value is the net asset value nav of a company s stocks and bonds. For most assets and liabilities book values are based on the historic cost of items. What is the definition of net book value.

Amortization amortization refers to the process of paying off a debt through scheduled pre determined. Book value is calculated by subtracting any accumulated depreciation from an asset s purchase price or historical cost. In accounting book value refers to the amounts contained in the company s general ledger accounts or books.

The term book value derives from the accounting practice of. What is book value. Book value is an asset s original cost less any accumulated depreciation and impairment charges that have been subsequently incurred.