Book Value Definition Ifrs

Book value is calculated by subtracting any accumulated depreciation from an asset s purchase price or historical cost.

Book value definition ifrs. It is determined as the cost paid for acquiring an asset minus any depreciation amortization or impairment costs applicable to the asset. It s wise for investors and traders to pay close attention however to the nature of the company and other assets that may not be well represented in the book value. Book value also known as carrying value or net asset value is the value of an asset that is recognized on the balance sheet.

Book value is equal to the cost of carrying an asset on a company s balance sheet and firms calculate it netting the asset against its accumulated depreciation. It is also called book value or net book value. Book value or carrying value is the net worth of an asset that is recorded on the balance sheet.

Book values are important for valuation purposes because they are based on accounting principles which are calculated consistently for all companies. Book value is a widely used financial metric to determine a company s value and to ascertain whether its stock price is over or under appreciated. For most assets and liabilities book values are based on the historic cost of items.