The Book Value Formula

In case where subsequent investments are to be made after the initial investment the above formula would not account for the additional investment.

The book value formula. How book value of assets works. 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.

This helps create consistency in reporting standards. Alternatively book value can be calculated as the sum total of the overall shareholder equity of the company. The term book value is a company s assets minus its liabilities and is sometimes referred to as stockholder s equity owner s equity shareholder s equity or simply equity.

This can be summarized into the following formula. Book value formula calculates the net asset of the company derived by total of assets minus the total liabilities. Book value may also be.

The book value of an asset is its original purchase cost minus any accumulated depreciation. The book value per share formula is used to calculate the per share value of a company based on its equity available to common shareholders. Instead the average book value shall be found by adding the net.

Initial investment scrap value working capital 2. 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. Mathematically it is represented as book value of equity formula owner s contribution treasury shares retained earnings accumulated other incomes.

When compared to the current market value per share the book value per share can provide information on how a company s stock is valued. Book value of assets formula 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 depreciation periodic reduction in the value of the asset amortized as per standards. Book value of equity formula it is calculated by adding the owner s capital contribution treasury shares retained earnings and accumulated other incomes.