Book Value Refers To

The value inherent in.

Book value refers to. What is net book value. Nbv is calculated using the asset s original cost how much it cost to acquire the asset with the depreciation depletion or amortization of the asset being subtracted from the asset s original cost. Equity is the total value of all shares issued by a company and the value of all earnings that the company has retained.

However in practice depending on the source of the calculation book value may variably include goodwill intangible assets or both. 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. It s also known as the net 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. The figure is determined using historical company data and isn t typically a subjective figure. Book value can also refer to the amount that investors would theoretically receive if an entity liquidated which could be approximately the shareholders equity portion of the balance sheet if the entity liquidated all of its assets and liabilities at the values stated on the balance sheet.

It can also be greater than less than or equal to zero. Book value is considered important in terms of valuation because it represents a fair and accurate picture of a company s worth. The asset s cost minus the asset s accumulated depreciation.

In accounting book value is the value of an asset according to its balance sheet account balance. Net book value nbv refers to a company s assets or how the assets are recorded by the accountant. 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.

It means that investors and market analysts get a reasonable idea of the company s worth. For assets the value is based on the original cost of the asset less any depreciation amortization or impairment costs made against the asset. Definition of book value.