Define book value of a fixed asset

The historical cost of assets is the purchase price of the assets. Book value is commonly used when referring to fixed assets or depreciable assets, assets that have a relatively long useful life, these assets. Its important to note that the book value is not necessarily the same as the fair market value the amount the asset could be sold for on the open market. Book value is strictly an accounting and tax calculation. When compared to the companys market value, book value can indicate whether a stock is under or. Asset value definition at, a free online dictionary with pronunciation, synonyms and translation. Asset book value definition what is asset book value. Fixed assets are not expected to be consumed or converted into cash within a year. Original historical price paid for an asset, without any depreciation deduction.

In accounting a company, the net book value is the value of the companys assets minus the value of its liabilities and intangible assets. Fixed assets are often stated at net book value original cost less cumulative depreciation, while current assets are stated at original cost or market value, whichever is the lower. Entity acquired machine costs 100,000 usd and the scrap value of assets at the. Fixed assets of an entity is normally stated at the net book value if there is no. It is calculated by subtracting the accumulated depreciation from the historical cost and improvement cost of the assets. It serves as the total value of the companys assets that shareholders would theoretically receive if a company were liquidated.

Asset definition is the property of a deceased person subject by law to the payment of his or her debts and legacies. Net book value financial definition of net book value. The book value of an asset is the value of that asset on the books the accounting books and the balance sheet of the company. As the accounting value of a firm, book value has two main uses. The book values of assets are routinely compared to market values as part of various financial analyses. It is important to realize that the book value is not the same as the fair market value because of the accountants historical cost principle and matching principle. Book value of an asset is the value at which the asset is carried on a balance sheet and calculated by taking the cost of an asset minus the accumulated depreciation.