Average Net Book Value Formula
Book value formula calculates the net asset of the company derived by total of assets minus the total liabilities.
Average net book value formula. To define net book value it can be rightly stated that it is the value at which the assets of a company are carried on its balance sheet. Formula for net book value. This means the net book value of the truck would be 65 000 after five years.
How is net book value calculated. Significance of net book value. The net book value of an asset is calculated by deducting the depreciation and amortization of an asset from its original cost.
Net book value formula original purchase cost accumulated depreciation original purchase cost here means the purchase price of the asset paid at the time when the company purchased the assets. Here s how to derive nbv using the above net book value formula. How to calculate net book value let s say abc trucking company purchases a semi truck for 100 000 and it has depreciated 7 000 each year for five years.
The formula used to calculate the net book value of the assets is as below.