Net book value
Net book value (NBV) is an asset's original cost minus its accumulated depreciation, the carrying amount reported on the balance sheet.
Also known asNBV
See it move
The infographic is a split bar representing original cost of €60,000 as the whole bar, divided into two segments: accumulated depreciation of €40,000 and net book value of €20,000. The note explains the arithmetic concretely: after four years of depreciation at €10,000 per year, the €60,000 original cost reduces by €40,000, leaving €20,000 on the balance sheet as the carrying value of the asset.
The formula
Variables
- Net book value (carrying amount on the balance sheet) (€)
- Original cost of the asset (€)
- Accumulated depreciation charged to date (€)
The standard investment-base figure for ROI and residual income in investment-centre performance measurement.
Check yourself
A division owns a single machine that originally cost €120,000. It is depreciated straight-line over 10 years with no residual value. What is the net book value of the machine at the end of year 4?