Book Value

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.

Sign Up to Learn More!

Join our mailing list today to get notified of new discount offers, course updates, Roger CPA Review news, and more!