Book Value Is Defined As

Book value definition what is book value.

Book value is defined as. Book value is the net asset value nav of a company s stocks and bonds. The value inherent in. Book value or net book value is the term used to describe how much a business or asset is worth according to its financials.

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. Book value is calculated by subtracting any accumulated depreciation from an asset s purchase price or historical cost. 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.

However in practice depending on the source of the calculation book value may variably include goodwill intangible assets or both. Book value is a widely used financial metric to determine a company s value and to ascertain whether its stock price is over or under appreciated. Book value per common share or simply book value per share bvps is a method to calculate the per share book value of a company based on common shareholders equity in the company.

For assets the value is based on the original cost of the asset less any depreciation amortization or impairment costs made against the asset. Book value or carrying value is the net worth of an asset that is recorded on the balance sheet. Finding the nav involves subtracting the company s short and long term liabilities from its assets to find net assets.

Businesses can use this calculation to determine how much depreciation costs they can write off on their taxes. For companies it is calculated as the original cost of the asset less accumulated depreciation and impairment costs. In accounting book value is the value of an asset according to its balance sheet account balance.

It s also known as the net book value. Traditionally a company s book value is its total assets minus intangible assets and liabilities. Book value of assets formula.