Book Value Vs Net Book Value

Net book value of machinery or equipment can also be impaired by damage or obsolescence.

Book value vs net book value. Another way to say that is if the balance sheet were perfect the book value of a company would equal its market value. Companies without a lot of nta tend to trade at multiples of their p b. Book value per common share also known as book value per equity of share or bvps is used to evaluate the stock price of an individual company whereas net asset value or nav is used as a.

What is net book value. 241 billion in assets less 168 billion in liabilities equals 72 billion in owners equity. Net book value is based on depreciation which is an estimate based on the asset s estimated useful life and salvage value.

If the ratio is greater than 1 the stock is trading at a premium to its book value. Net book value nbv refers to a company s assets or how the assets are recorded by the accountant. If the ratio is less than 1 the stock is trading at a discount to its book value.

Net book value 1 the cost of an asset the amount that was paid for it minus accumulated depreciation for financial reporting purposes fair value asc 805 2 the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between marketplace participants at the measurement date. That was computed as shown here. For example a company purchased a computer for 900 in year one and expects the computer to have a usef.

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. The original cost of an asset is the acquisition cost of the asset which is the cost required to. The p b is the share price of a company divided by its nta per share or book value per share.

Ask an expert about net book value what is the net book value formula for depreciation. Book value is an accounting term for the amount recognised in the financial statements according to a set of accounting principles i e. In the case of microsoft for example the company s book value on june 30th 2017 was 72 billion.