Legal Definitions - net book value

Definition: Net book value is the value of an asset that appears on a company's financial records, minus the amount of depreciation that has been recorded since the asset was last valued.

Example: Let's say a company purchased a delivery truck for $50,000. After a year of use, the company records $10,000 in depreciation for the truck. The net book value of the truck after one year would be $40,000 ($50,000 - $10,000).

Another example could be a computer that a company purchased for $1,000. After two years of use, the company records $600 in depreciation for the computer. The net book value of the computer after two years would be $400 ($1,000 - $600).

These examples illustrate how the net book value of an asset is calculated by subtracting the accumulated depreciation from the original cost of the asset. This calculation provides a more accurate representation of the asset's current value on the company's financial records.