What is Book Value?
Carrying value (book value) refers to the value of the enterprise that is measured in accordance with the principles and methods of accounting. The International Evaluation Standards point out that the book value of an enterprise is the difference between the total assets of the enterprise (net of depreciation, depletion and amortization) and the total liabilities of the enterprise as reflected in the company's balance sheet. Synonymous [1]
Book value
- Book value of assets = Book value of assets-Depreciation or amortization of assets-Provision for asset impairment
- For joint stock companies:
- Book value
- For fixed assets:
- Book value = original price of fixed assets-provision for impairment-accrued accumulated depreciation (ie: net fixed assets)
- Book balance = original book value of fixed assets;
- Net book value (net value of fixed assets) = depreciated value of fixed assets = original price of fixed assets-accrued accumulated depreciation.
- Related to this are two more confusing concepts, namely "net fixed assets" and "net fixed assets." The relationship between them is expressed by the formula: net fixed asset value = fixed asset original price-cumulative depreciation; net fixed asset amount = net fixed asset value-fixed asset impairment provision.
- For other assets of an enterprise, only the concepts of book value and book balance are involved. The book value is the amount after deducting the provision for impairment; the book balance is the amount of the respective account balance.
- The book value of bonds refers to the actual investment amount of bond holders, which is equal to the price minus accrued interest income, that is, the book's book balance minus the relevant allowance items. The amount after deducting the provision for impairment. [2]
- E.g:
- Book value of fixed assets: It is the amount of fixed assets cost less accumulated depreciation and accumulated impairment reserves.
- The book value of long-term bond investment is: the amount of the book balance after deducting the impairment reserve.
- Among them, the book balance = face value + accrued interest + unamortized premium (or-unamortized discount).
- Note: In English, the book value is BOOK VALUE, depreciation is DEPRECIATION, and amortization is AMORTIZATION