Net Book Value Formula Straight Line Method

To calculate the net book value for an asset apply the following formula.

Net book value formula straight line method. Nbv gross cost of asset accumulated depreciation let s start by calculating the original cost of an asset. The formula for calculating book value. Calculating net book value.

Formula for calculating straight line depreciation is. Net book value cost of the asset accumulated depreciation here s a quick example. Net book value original asset cost accumulated depreciation.

B p p s t n. Depreciation per year cost of asset salvage value useful life of asset. The formula for calculating nbv is as follows.

The original cost of an asset includes the original cost of acquisition plus any costs associated with the delivery and intended use of an asset to the purchase price. The original cost of an asset is the acquisition cost of the asset which is the cost required to not only purchase or construct the asset but also to bring it to the location and condition intended for it by management. The formula to calculate net book value is.

Straight line method slm is one of the easiest and most commonly used methods for providing depreciation. Suppose company x bought a vehicle three years ago for 40 000. Net book value is calculated as the original cost of an asset minus any accumulated depreciation accumulated depletion accumulated amortization and accumulated impairment.

5 000 per month 600 000 120 months multiplied by the 12 months the asset was in use during 2016 5 000 12 months. Net book value 540 000 in this example the accumulated depreciation was calculated by determining the depreciation amount per month and multiplying it by the number of months the asset was in use as of 12 31 2016. Sample calculation of net book value.