Book Value Is Quizlet

In accounting book value is the value of an asset according to its balance sheet account balance.

Book value is quizlet. A stock s book value per share is a measure of how much a common stockholder could expect to receive for each share if the corporation were liquidated. Book value salvage value at the end of an asset s useful life units of production method definition used when equipment use varies from period to period to better match expenses to revenues. The book value of a company is the difference between that company s total assets and total liabilities and not its share price in the market.

Traditionally a company s book value is its total assets minus intangible assets and liabilities. Book value is the actual worth of an asset of the company whereas market value is just a projected value of the firm s or asset s worth in the market. Conversely market value shows the current market value of the firm or any asset.

Book value changes annually but market value changes every next moment. However in practice depending on the source of the calculation book value may variably include goodwill intangible assets or both. The book value of an asset is its original purchase cost adjusted for any subsequent changes such as for impairment or depreciation.

Definition of book value in accounting book value refers to the amounts contained in the company s general ledger accounts or books. Book value also carrying value is an accounting term used to account for the effect of depreciation on an asset. While small assets are simply held on the books at cost larger assets like buildings and equipment must be depreciated over time.

Market value is the price that could be obtained by selling an asset on a competitive open market. The value inherent in. An arbitrary accounting value.

There is nearly always a disparity between book value. For assets the value is based on the original cost of the asset less any depreciation amortization or impairment costs made against the asset. Book value is equal to the cost of carrying an asset on a company s balance sheet and firms calculate it netting the asset against its accumulated depreciation.