Book Value

Definition - What does Book Value mean?

Book value is the value of a particular asset at a current fair market price. Book value is calculated by subtracting the original cost of the asset by the depreciation cost. In the context of the law, book value can be used to assess assets for legal reasons. For example, in divorce law, the value of assets owned by both spouses may need to be assessed using book value.

Justipedia explains Book Value

If an asset has experienced significant depreciation, this can dramatically affect its book value. Depreciation is anything that decreases the useful life of the item in question. So, for example, if a new car was purchased for $10,000, was driven for three years and then was in an accident, its value could depreciate by $4,000. The car would then have a book value of $6,000. This book value could be used if a legal assessment of the car's worth needed to be made.

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