- net amount shown for an asset on the balance sheet. It equals the gross cost less the related valuation account. For example, the book value of an auto is its initial cost less the accumulated depreciation. Since book value is based on historical cost, it will differ from market value. Book value is a going-concern value.
- carrying value of a liability equal to its face value less unamortized discount.
- current value of an asset as it appears on the balance sheet. It can be the same as market value, or it can represent the difference between the purchase price and market price, less accumulated depreciation.
- net worthof a corporation, sometimes expressed in terms of value dollars per share of common stock, after deducting the outstanding preferred stock.
- original purchase price of an asset.
value of individual asset, calculated as actual cost less allowances for any depreciation. Book value may be much more or less than current market value.
- value at which an asset is carried on a balance sheet. For example, a piece of manufacturing equipment is put on the books at its cost when purchased. Its value is then reduced each year as depreciation is charged to income. Thus, its book value at any time is its cost minus accumulated depreciation. However, the primary purpose of accounting for depreciation is to enable a company to recover its cost, not replace the asset or reflect its declining usefulness. Book value may therefore vary significantly from other objectively determined values, most notably market value.
- net asset value of a company's securities, calculated by using the following formula:
Book value can be a guide in selecting underpriced stocks and is an indication of the ultimate value of securities in liquidation.
cost of the assets listed on the accounting records of the company. These assets include the following: real estate (to include any adjustments for depreciation), transportation equipment (to include any adjustments for depreciation), policy loans (limited to the unpaid principal balance plus any unamortized premiums minus any accrued discounts), mortgage loans (limited to the unpaid principal balance plus any unamortized premiums minus any accrued discounts), cash, and joint ventures. Not listed at book value are securities.
the carrying amount of an asset, as shown on the books of a company. Generally the amount paid for an asset, less depreciation.
Example: X Corporation purchases a building for $1,000,000, then depreciates it by $100,000 on its financial statements. The book value was $1,000,000 and is now $900,000.
