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book value formula for asset. The formula for calculating book value per share is the total common stockholders equity less the preferred stock divided by the number of common shares of the company. Only the net book value is changed.
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Sample Calculation of Net Book Value. To compute for book value four essential parameters are needed and these parameters are present amount or worth P salvage value S total estimated life of the asset N and number of years of the asset t. An assets book value or carrying value on the balance sheet is determined by subtracting accumulated depreciation from the initial cost or purchase price of the asset.
The formula for calculating NBV is as follows.
How to Calculate Book Value. Depreciation represents the use of an asset over its useful economic life. It takes the net value of a listed companys assets also known as shareholders equity and divides it by the total number of outstanding shares of that organisation. When it reaches the end of its useful life the NBV should be equal to its salvage value.
