When the accumulated depreciation of a fixed asset is deducted from the Original cost of the asset, you get the Net Book Value.
The Net Book Value of an Asset:
- Shows the current value of the asset according to a company's depreciation method
- Is calculated by deducting accumulated depreciation from the cost of the asset
From the moment a fixed asset is bought, its value begins to depreciate because the asset gets weaker overtime. This depreciation is accumulated such that at any given point, it can be subtracted from the cost of the asset to show its current value.
In conclusion, the Net Book Value is the result of the accumulated depreciation being deducted from the cost price of the asset.
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