What is the book value of a company?

The book value of a company is the net difference between that company’s total assets and total liabilities, where book value reflects the total value of a company’s assets that shareholders of that company would receive if the company were to be liquidated. An asset’s book value is equivalent to its carrying value on the balance sheet.

What is a book value figure?

The book value figure is typically viewed in relation to the company’s stock value ( market capitalization) and is determined by taking the total value of a company’s assets and subtracting any of the liabilities the company still owes. The company’s balance sheet also incorporates depreciation in the book value of assets.

How do you calculate the book value of an asset?

To calculate the book value of an asset, you subtract its accumulated depreciation from its original cost. To calculate the book value of a company, you subtract the value of its total liabilities and intangible assets from the value of its total assets. Use the following formula to calculate the book value of an asset:

What is the difference between historical cost and book value?

Historical cost is always used as opposed to the market value of an asset even if the value of the asset has changed since it was purchased. Book value can also refer to the value of a company minus its intangible assets and liabilities. When defining book value, it has a few possible definitions.