How to Use Book Value Calculator
Enter the Acquisition Cost
Enter the Depreciation
A company purchases a supercomputer for $50,000. The computer has a 10 year lifespan. With this we know that the pc will depreciate $5,000 each year, we get 5,000 by dividing the purchase cost with the lifespan 50,000/10.
Each Year the deprecation will increase by 5,000, after 3 years the book value will be $35,000 as 3*5,000 - 50,000. This shows the value of the item over time. Market value is different as many items lose around half of value once its been opened/used.
For accounting, book value is the value of an asset
on a balance sheet, it is calculated by getting the accumulated depreciation and the subtracting these from the cost of the asset. Book value can also include goodwill and/or intangible assets.
Book value can be used for various things:
- Companies can be compared by checking their book value. The more years of balance sheet data the better, it provides better analysis of the financial progress.
- indicates the total value of a company's assets that shareholders would receive if the company was liquidated, in
- Book value can revel if a stock is overpriced or underpriced.