Book value

The book value of an asset is the value of the asset as shown in the accounts — specifically in the balance sheet.

The book value of assets can be very different from their real economic value to a company which (depending on circumstances) can be more accurately gauged by estimating replacement cost or resale value.

The book value shown in the accounts is usually the cost of an asset less accumulated depreciation. This is sometimes called the net book value or the written down value. It may also include other adjustments: impairment and revaluation.

When a company sells such an asset, if the price at which it is sold is more than the book value, the difference is shown as a profit on disposal in the P & L. If an asset is sold for less than the book value, a loss is shown.

The book value of an entire company (or a business within one) is its net asset value.