Book Value

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Book Value

The current value of an asset. The book value of an asset at any time is its cost minus its accumulated depreciation. (Depreciation reflects the decrease in the useful life of an asset due to use of the asset.) Companies use book value to determine the point at which they have recovered the cost of an asset.

The net asset value of a company's Securities. This is calculated by subtracting from the company's total assets the following items: intangible assets (such as goodwill), current liabilities, and long-term liabilities and Equity issues. This figure, divided by the total number of bonds or of shares of stock, is the book value per bond or per share of stock.

The calculation of book value is important in determining the value of a company that is being liquidated. For example, if a corporation has 100,000 shares of stock issued and outstanding and its assets total $5 million and its intangible assets and all liabilities total $1.6 million, its net asset value is $3.4 million and its book value per share is $34.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.

book value

n. a determination of the value of a corporation's stock by adding up the stated value of corporate assets as shown on the books (records) of a corporation and deducting all the liabilities (debts) of the corporation. This may not be the true value of the corporation or its shares since the assets may be under- or over-valued.

Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.
References in periodicals archive ?
The book value of a company refers to how much the company will be worth if it liquidated its assets and paid all its liabilities.
Summary: Book value represents that part of the accounting value of a business that will be left after debts are paid off.
The results document a significant positive association between book value, earnings, and market value of the firm.
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He goes on to show that the value of a stock can be written in terms of its book value and capitalized current earnings, adjusted for dividends.
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(RCC) buy collateral-backing bad loans held by banks at effective book value.
The strength of the real estate market will close the gap between sales prices and book values, allowing for a collective upper management "sign-off" on corporate real estate deals.
If an asset is disposed of for less than book value, a realized loss will be recognized.