Book Value Less Depreciation

Traditionally a company s book value is its total assets minus intangible assets and liabilities.

Book value less depreciation. Book value is calculated on property assets that can be depreciated. For companies it is calculated as the original cost of the asset less accumulated depreciation and impairment costs. The cost of an asset normally comprises depreciation and repairs and maintenance.

This means that the new book value at the end of an accounting period would be 20 less than the previous book value. Difference between book and tax depreciation. Book value of assets is defined as the value of an asset in the books of records of a company or institution or an individual at any given instance.

The method is used as it evens out the total cost of an asset to the business. The book values of assets are routinely compared to market values as part of various financial analyses. Book value does not need to be calculated for more stable assets that aren t subject to depreciation such as cash and land.

For example double declining depreciation for asset with a 10 year life would be 2 x 10 or 20. 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. Generally the difference between book depreciation and tax depreciation involves the timing of when the cost of an asset will appear as depreciation expense on a company s financial statements versus the depreciation expense on the company s income tax return.

This 20 2 000 in the case of the first year of the asset s life would be the depreciation expense. The value inherent in. These assets should be reported to the manager even though they have a zero book value so the manager is aware that these fixed assets are still being used but no depreciation expense is being recorded for their use.

However in practice depending on the source of the calculation book value may variably include goodwill intangible assets or both. As a result book value can also be. Net book value is the original cost less accumulated depreciation to date on the asset.