What is net book value?

Net book value is the value of an asset as recorded on the balance sheet, minus any accumulated depreciation or impairment charges. It is calculated by subtracting the accumulated depreciation or impairment from the original cost of the asset. The net book value reflects the remaining value of the asset that has not yet been expensed.

Net book value is important for assessing the overall value of an organization, as it provides a more accurate representation of the asset's worth than the original cost alone. It is also used in financial statements to determine the company's profitability and financial health. Additionally, net book value is used in calculating depreciation and determining the value of assets for potential sale or disposal.