Book Value Formula Accounting

Book value may also be.

Book value formula accounting. When it reaches the end of its useful life the nbv should be equal to its salvage value. Total value of the asset value at which the asset is purchased. Example of book value.

The book value of an asset is the value of that asset on the books the accounting books and the balance sheet of a company. Book value formula calculates the net asset of the company derived by total of assets minus the total liabilities. The formula for calculating book value per share is the total common stockholders equity less the preferred stock divided by the number of common shares of the company.

In accordance with the cost principle of accounting assets are always listed in the general ledger at cost. Net book value original asset cost accumulated depreciation. The book value of an asset is its original purchase cost minus any accumulated depreciation.

The formula for book value per share is to subtract preferred stock from stockholders equity and divide by the average number of shares outstanding. The formula for calculating nbv is as follows. Book value of an asset is.

Sample calculation of net book value. Be sure to use the average number of shares since the period end amount may incorporate a recent stock buyback or issuance which will skew the results. Other cost include impairment cost and related costs which directly affect the cost of the asset.

This helps create consistency in reporting standards. Depreciation periodic reduction in the value of the asset amortized as per standards. Define what book value represents.