Assets Book Value: Definition & How to Calculate

What Is Assets Book Value?

The book value of an asset refers to the value of an asset as recorded in a company’s accounting books. It represents the original cost of the asset minus any accumulated depreciation, amortization, or impairment costs.

Understanding what is the book value of an asset helps investors and accountants evaluate the value of an asset on the balance sheet rather than its current market price.

The book value of the asset is used to track financial performance, asset management, and to calculate metrics like return on assets.

How to Calculate Book Value of Assets

To calculate the book value of assets, start with the purchase cost of the asset and subtract any accumulated depreciation or amortization:

Book Value of Asset = Original Cost – Accumulated Depreciation/Amortization

This gives the book value, which shows how much of the original investment in the asset remains on the books.

For multiple assets, adding up the book value of assets provides the total asset value on the balance sheet.

What Is Net Book Value of Assets?

The net book value (NBV) of assets is similar to book value but emphasizes the remaining value of the asset after all depreciation, amortization, and impairment adjustments.

NBV is often used interchangeably with net book value, providing a realistic estimate of the asset’s current worth from an accounting perspective.

How to Calculate Net Book Value of an Asset

To calculate the net book value of an asset, subtract accumulated depreciation, amortization, and any impairment from the original cost of the asset:

Net Book Value (NBV) = Original Cost – Accumulated Depreciation – Impairment

The resulting NBV reflects the net book value of the asset on the balance sheet and is useful for assessing financial health, investment decisions, and reporting accurate book value assets.