Book value
In one sentenceThe value of an asset as it appears in the books: its cost less its accumulated depreciation or amortization up to a given date.
Simply put
Book value is not the price the asset would sell for today, but what remains of its cost after deducting the part allocated to past years.
You need it when selling the asset: if you sell it for more than its book value you have a capital gain, and if for less, a loss.
Worked example
A car costing 100,000 SAR with annual depreciation of 18,000 SAR was sold after two years for 70,000 SAR.
Accumulated depreciation after two years18,000 × 2 = 36,000 SAR
Book value100,000 − 36,000 = 64,000 SAR
Selling price70,000 SAR
Gain on sale of the car (70,000 − 64,000)6,000 SAR
Formula: Book value = Cost − Accumulated depreciation
Don't confuse it with
Market valueThe price the asset could be sold for today, which may be higher or lower than book value.
in FullScreen ERP
When an asset is sold or scrapped, the system calculates the capital gain or loss. Fixed assets