Book Value Of Equipment Definition

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 of equipment definition. The tbv excludes a firm s intellectual property patents and trademarks because these are intangible assets that cannot be easily sold such as property plant and equipment. For companies it is calculated as the original cost of the asset less accumulated depreciation and impairment costs. For example if you bought.

Book value is an asset s original cost less any accumulated depreciation and impairment charges that have been subsequently incurred. Net book value of machinery or equipment can also be impaired by damage or obsolescence. Table 9 2 on page 202 shows why it is imperative to use the right definition for the valuation of equipment since each value definition will represent a dif ferent percentage of the reproduction or replacement cost new.

Businesses can use this calculation to determine how much depreciation costs they can write off on their taxes. 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. The asset s cost minus the asset s accumulated depreciation.

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. Net book value is based on depreciation which is an estimate based on the asset s estimated useful life and salvage value. Traditionally a company s book value is its total assets minus intangible assets and liabilities.

What is book value. However in practice depending on the source of the calculation book value may variably include goodwill intangible assets or both. In accounting book value refers to the amounts contained in the company s general ledger accounts or books.

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 tangible book value per share tbvps shows the amount per share that shareholders would expect if the firm was liquidated today. Book value of asset definition book value of assets is defined as the value of an asset in the books of records of a company or institution or an individual at any given instance.