Book value can also be thought of as the net asset value of a companycalculated as total assets minus intangible assets patents, goodwill and liabilities. Definition book value the value of an organizations assets as carried on the balance sheet in accordance with generally accepted accounting principles gaap. Net book value legal definition of net book value by law. Book value is strictly an accounting and tax calculation. Net book value means the carrying value of each of the assets as reflected on the books of seller as of the closing date in accordance with gaap and consistent with the accounting policies and practices of seller in effect as of the date of this agreement. A higher market value than book value means the market is.
Table 1 below illustrates the calculation applied in arriving at a nbv of zero. In other words, the book value adjusts the historical cost of an asset by the accumulated depreciation. Book value is the term which means the value of the. Book value or carrying value is the net worth of an asset that is recorded on the balance sheet. Written down value of an asset as shown in the firms balance sheet. Book value also known as carrying value or net asset valuenet asset valuenet asset value nav is defined as the value of a funds assets minus the value of its. Book value vs fair value overview, key distinctions.
Net book value is the value at which a company carries an asset on its balance sheet. Because, according to the provisions of gaap, an assets bv cannot show any increase or decrease in the assets market value, it rarely reflects the. Net book value legal definition of net book value by law insider. Net book value means, i for any vehicle, the net book value of such vehicle as reflected on the books of the company in accordance with gaap, after netting out without limitation a the cost of payoff of any lien including any consumer lien on such vehicle excluding the lien of the administrative agent under the loan documents and b reserves maintained in accordance with the company. The book value of a stock is theoreticallythe amount of money that would be paid to shareholders if the company was liquidated and paid off all of its liabilities. Net book value financial definition of net book value. Net book value in accounting, an assets original price minus depreciation and amortization. Book value the value of an organizations assets as carried on the balance sheet in accordance with generally accepted accounting principles gaap.
Net book value is calculated as the original cost of an asset, minus any accumulated depreciation, accumulated depletion, accumulated amortization, and accumulated impairment. Net book value is the amount at which an organization records an asset in its accounting records. Bv is computed by deducting accumulated depreciation from the purchase price of the asset. Essentially, an assets book value is the current value of the asset with respect to the assets useful life. Why net book value does not equal fair value cohnreznick. Essentially, an assets book value is the current value of the asset with respect. Net book value the current book value of an asset or liability. Every year as depreciation is booked for an asset, the accumulated depreciation account is credited.
The book value for real and personal property is typically the original cost of the property less depreciation. Net book value nbv refers to a companys assets or how the assets are. Book value can also be thought of as the net asset value of a company calculated as total assets minus intangible assets patents, goodwill. Book value is the term which means the value of the firm. There are no rules or authoritative guidelines that define tangible book value. Gaap is a comprehensive set of accounting practices that were developed.1558 1503 1322 457 49 434 1356 356 699 153 1360 796 276 882 710 1550 1193 1027 403 1414 971 498 1101 176 693 674 1134 1138 723 957 899 1254 665 881 255 164 408 468 1462 612