Glossary

Net book value

In short

Net book value, sometimes called book value or carrying amount, is the cost of an asset less the depreciation accumulated against it to date. It is what the asset is carried at on the books, not what it would sell for. As depreciation is charged each period, the net book value falls from the original cost toward the residual value. This is general information, not accounting or financial advice.

Net book value

Net book value, also called book value or carrying amount, is the cost of an asset less the depreciation accumulated against it to date. It is the figure the asset is carried at on the books at a given moment, not the price it would fetch if you sold it. As you charge depreciation each period, the net book value steps down from the original cost toward the residual value.

This page provides general information about an accounting term. It is not accounting, tax or financial advice. Confirm treatment with your accountant or adviser.

How it is calculated

The calculation is a subtraction:

  • Net book value equals cost minus accumulated depreciation.

If an asset cost 42,000 and 12,000 of depreciation has been charged against it so far, its net book value is 30,000. Each period’s depreciation charge adds to the accumulated total, so the net book value keeps falling as the asset ages or is used, depending on the method.

Book value is not market value

A common confusion is to read net book value as what the asset is worth. It is not. Net book value is an accounting figure driven by cost and the depreciation method you chose. The actual market value, what a buyer would pay, can sit well above or below it. A vehicle might be carried at a low net book value yet still sell for a fair amount, or specialised plant might be carried higher than anyone would pay. The two answer different questions.

How Cohiva Control tracks it

Cohiva Control computes depreciation across six methods and maintains each asset’s net book value as a running figure. Money is held as a fixed-precision decimal rounded half up, never as a floating point number, so the accumulated depreciation and the resulting net book value stay accurate to the cent over the asset’s whole life. Depreciation never reduces net book value below the residual value, a deliberate floor, and every depreciation charge is recorded on an append-only ledger. The journals that post to your accounting system carry the same figures.

Part of the Cohiva platform

Cohiva Control is part of the Cohiva platform. Leisure operators often run it with Cohiva Complex, and finance teams connect it to Cohiva Crunch for the general ledger. Explore the platform at www.cohiva.app.

Frequently asked questions

How do you calculate net book value?
Take the asset's cost and subtract the total depreciation charged against it so far. The result is the net book value, the amount the asset is carried at on the books at that point in time.
Is net book value the same as market value?
No. Net book value is an accounting figure based on cost and accumulated depreciation. Market value is what the asset would fetch if sold, which can be higher or lower. The two are rarely the same.
Does net book value ever reach zero?
It falls toward the residual value, not necessarily zero. If an asset has a residual value, depreciation stops once net book value reaches it, because depreciation does not take an asset below its residual value.