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book value formula assets. When it reaches the end of its useful life the NBV should be equal to its salvage value. Thus net book value is calculated by taking the book value of a companys non-current assets including land buildings computers etc plus the book value of a companys current assets including inventory cash etc and subtracting the book value of a companys current and non-current liabilities such as accounts payable and debt.
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The formula for calculating NBV is as follows. Book Value Total Assets Total Liabilities. The formula to calculate net book value is.
Mathematically book value is the difference between a companys total assets and total liabilities.
The book value figure is typically viewed in relation to the companys stock value market capitalization and is determined by taking the total value of a companys assets and subtracting any of the liabilities the company still owes. For example if you bought a machine for 50000 and its associated depreciation was 10000 per year then at the end of the second year the machine would have a book value of 30000. Heres how to derive NBV using the above net book value formula. Gross book value or gross value is the total value of assets before deducting any depreciation or impairment.
