Accounting Dictionary

Book Value

Book value is the cost of an asset minus accumulated depreciation.

Let’s say you have an asset worth $20,000 that will last five years. If you depreciated it evenly you would take $20,000 divide it by 5 and expense $4000 each year. The first year the accumulated depreciation would be $4000( $20,000 -$4000 = 16,000). The carrying value of the asset would be $16,000. The next year you would depreciate another $4000. Accumulated depreciation be $8,000. $20,000 – $8000 =$12,000. $12,000 is the book value, the cost at which the asset is carried on the balance sheet.

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