Business, Legal & Accounting Glossary
Cost of non-current (fixed) asset minus accumulated depreciation.
Net book value is the value at which a company carries an asset on its balance sheet. It is equal to the cost of the asset minus accumulated depreciation.
NBV = Cost of The Assets – Accumulated Depreciation.
Net book value is the value of an asset on the books of the company. For example, suppose a company buys a machine with a five-year useful life for $5,000 cash. It debits Fixed Assets $5,000 and credits Cash $5,000. The machine’s net book value is currently $5,000. After one year, the company records depreciation by debiting Deprecation Expense $1,000 ($5,000/5) and crediting Accumulated Depreciation for $1,000. The machine’s net book value is now the original cost ($5,000) less the accumulated depreciation ($1,000), or $4,000. The problem with net book value is whether it reflects economic reality or merely accounting convention. The net book value of $4,000 probably isn’t what the machine would fetch at public auction. Further, the net book value calculation itself is an estimate, because the machine’s exact useful life is unknowable. Nevertheless, net book value does give financial statement readers a rough idea of asset values. Note that net book value is similarly used to value long-term liabilities which are amortized, such as bonds. Finally, net book value is often simply expressed as the book value.
book value, carrying amount, write down, inventory value, equity value
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
Definitions for Net Book Value are sourced/syndicated and enhanced from:
This glossary post was last updated: 7th February, 2020 | 0 Views.