1. What is Net Book Value?

Net Book Value (NBV) represents the value of an asset as it appears on the balance sheet, calculated as the original cost minus accumulated depreciation. It shows the current worth of an asset after accounting for wear and tear over time.

2. How Does the Calculator Work?

The calculator uses the Net Book Value formula:

Where:

• Cost — Original purchase price of the asset ($)
• Accumulated Depreciation — Total depreciation charged to date ($)

Explanation: The formula subtracts the total depreciation expense from the original cost to determine the asset's current book value.

3. Importance of NBV Calculation

Details: Calculating net book value is essential for financial reporting, tax calculations, asset management, and determining the true value of company assets on the balance sheet.

4. Using the Calculator

Tips: Enter the original cost and accumulated depreciation in dollars. Both values must be positive numbers. The calculator will compute the net book value instantly.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between book value and market value?
A: Book value is based on accounting records (cost minus depreciation), while market value is the price the asset would fetch in the current market.

Q2: Can net book value be negative?
A: No, net book value cannot be negative. If accumulated depreciation exceeds the original cost, the NBV is typically reported as zero.

Q3: How often should NBV be calculated?
A: NBV should be recalculated at each accounting period end to reflect current depreciation expenses.

Q4: Does NBV represent the resale value?
A: No, NBV is an accounting concept and may not reflect the actual resale value of an asset.

Q5: How is accumulated depreciation calculated?
A: Accumulated depreciation is the sum of all depreciation expenses charged against an asset since it was acquired.