Accounting value recorded in the books, usually referring either to an asset's net amount or to a business's net assets after liabilities.
Book value is the accounting value recorded in the books rather than the current market price. For a single asset, book value usually means cost minus accumulated depreciation, amortization, or impairment. For the business as a whole, book value often means net assets or equity, which is assets minus liabilities.
Book value helps readers separate recorded accounting value from market opinion. It also helps explain why the same business can show one amount on the balance sheet while investors, buyers, or appraisers might assign a very different value outside the books.
In asset schedules, book value is often used interchangeably with net book value. That is usually the asset’s historical cost adjusted for accumulated reductions. In formal reporting language, carrying amount is often the more precise term.
For an asset, the common accounting shorthand is:
\[ \text{Book Value} = \text{Historical Cost} - \text{Accumulated Depreciation or Amortization} - \text{Impairment} \]
At the company level, book value usually refers to the residual amount belonging to owners after liabilities are subtracted from assets. That is why the phrase can be ambiguous unless the accountant makes clear whether the subject is one asset or the entity’s equity.
\[ \text{Company Book Value} = \text{Total Assets} - \text{Total Liabilities} \]
The same phrase can be used in two accounting contexts:
| Context | Inputs | Calculation | Amount |
|---|---|---|---|
| Equipment book value | Cost 90,000; accumulated depreciation 30,000 | 90,000 - 30,000 | 60,000 |
| Company book value | Assets 500,000; liabilities 320,000 | 500,000 - 320,000 | 180,000 |
The first amount is asset-specific. The second amount describes net assets or equity.
Book value is not the same as market value or fair value. It is also not always a single universally precise concept. On one page it may mean an asset’s net recorded amount, while on another it may mean the company’s equity value on the balance sheet. That is why the context matters and why formal reporting often prefers the term carrying amount for a specific asset or liability.