book value of an asset
Financial Dictionary — Accounting Fundamentals
Definition
The book value of an asset is the asset's cost minus the accumulated depreciation since the asset was acquired. This net amount is not an indication of the asset's fair market value. The book value of an asset is also referred to as the asset's carrying value
Use cases, Example & Why it matters
Use cases
- Used in day-to-day bookkeeping and journal entries to record transactions correctly.
- Used when preparing trial balances and reconciling accounts.
- Used when preparing trial balances and reconciling accounts.
Example
- Example: Accountants use **book value of an asset** when recording transactions and preparing the trial balance.
Why it matters
- Why it matters: Ensures accurate records, supports reliable reporting, and reduces posting and reconciliation errors.