Formula For Calculating Book Value Of Assets

Book value may also be.

Formula for calculating book value of assets. Depreciation periodic reduction in the value of the asset amortized as per standards. Formula to calculate book value of a company book value formula calculates the net asset of the company derived by total of assets minus the total liabilities. The calculation of book value for an asset is the original cost of the asset minus the accumulated depreciation where accumulated depreciation is the average annual depreciation multiplied by the age of the asset in years.

How book value of assets works. The formula is the company s assets minus liabilities intangible assets and the value of preferred stock. When it reaches the end of its useful life the nbv should be equal to its salvage value.

Calculating net book value. Other cost include impairment cost and related costs. Calculating the present amount or worth when the book value the salvage value the total estimated life of the asset and the number of years of the asset is given.

In the example above the asset s book value after 6 years would be 10 000 6000 or 4000. A conservative approach to evaluating a company s worth is to calculate tangible book value also called net tangible assets. To arrive at the book value simply subtract the depreciation to date from the cost.

Sample calculation of net book value. Note that the book value of the asset can never dip below the salvage value even if the calculated expense that year is large enough to put it below this value. The formula for calculating nbv is as follows.

Assets book value formula total value of an asset depreciation other expenses directly related to it. Total value of the asset value at which the asset is purchased. Accumulated depreciation per year depreciation x total number of years.