Book Value Of Equipment Sold

Machinery inventory and equipment tend to have large book values.

Book value of equipment sold. Depreciable assets have lasting value and they include items such as furniture equipment buildings and other personal property. You can analyze and compare companies by checking their book value. Investors and traders are more interested in buying or selling a stock at a fair price.

For example if you bought a machine for 50 000 and its associated depreciation was 10 000 per year then at the end of the second year the machine would have a book value of 30 000. Book value does not need to be calculated for more stable assets that aren t subject to depreciation such as cash and land. However new technology has replaced this type of equipment so willing buyers believe the market value is only 2 000.

The book value is now 6 000. Net book value of machinery or equipment can also be impaired by damage or obsolescence. Book value is the value of the company that will be posted on the balance sheet.

In some cases such as that of heavy machinery the market value will be significantly higher than the book value. Fair market value should reflect the current price of the asset based on its condition which is often estimated as the replacement cost of the asset. Book value is calculated on property assets that can be depreciated.

Ask an expert about net book value what is the net book value formula for depreciation. Book value and market value.