It is not same as market value because book value of assets derives from its cost and deduction of depreciation, while market value varies due to market conditions. That's why it may not be same.
Book value is the value of asset shown in financial statements while fair value is the value at which asset can be sold in market
When assets are recorded a company's balance sheet, they are valued at historical cost (what was paid for the asset), less any accumulated depreciation or amortization if applicable. This holds true even if the market value of the asset is considerably more than what the company paid for it. However, if the market value of a company's assets drops significantly below the asset's historical cost, then it sometimes becomes necessary to revalue the asset at the lower market value. This revaluation is called impairment. When it is appropriate to impair an asset depends on the type of asset in question. The difference between the current book value of the asset, and the value of the asset after impairment, is your impairment expense (cost).
Depreciation spreads the cost of a fixed asset over the useful life of that asset so a portion of that cost is recognized as an expense in each period that the asset is in service. The original cost, less the accumulated depreciation is the net book value of the asset. The net book value may not represent the actual market value of the asset. Depreciation is not concerned with the market value but rather the value of the contribution that the asset makes to the business.
In general, financial statements show the book value of an asset, not the market value. The few instances where the financial statements will show market valuations are as follows: * When derivatives are carried for hedge purposes, they are periodically marked-to-market * When an investment appears to materially have lost value (when comparing to similar instruments in the market or, for illiquid markets, when operating cash flows from an investment go down markedly), conservatism requires the asset value to be moved to the "market" or lower price
It is false that the book value of a fixed asset reported on the balance sheet represents its market value on that date. Fixed assets are also known as tangible assets.
Book value of an asset is the value which is shown in books of accounts while market value of asset is the value which is currently same asset is selling in market so both of these values are not same but it can be same but normally they are not same.
The meaning and/or use of a "market to market" analysis is to attempt to provide customers, stockholders, CEO's and everyone else under the sun, a way to accurately measure the value of an asset compared to the market in which the asset will be sold in. This market to market valuing of an asset attempts to gain an understanding of what an individual will profit or lose based on the difference between the "book-vale" of an asset, and the "market value" of an asset.
To find the salvage value of an asset, subtract the estimated disposal costs from the asset's current market value. This value represents the amount the asset is expected to be worth at the end of its useful life.
Book value is the value of asset shown in financial statements while fair value is the value at which asset can be sold in market
An option's underlying asset is a market traded asset, such as currency exchange rate, stocks or bonds, and market indices. Fluctuations in the market value of an underlying asset serve as the basis for the value of an option vis-à-vis an option's strike price.
No. Depreciation is the process of allocating to expense the cost of a plant asset.
Yes book value of any asset is the value which is shown in balance sheet of company while market value is not shown anywhere it is the price which any asset is saleable in market.
Book value of asset is the value of asset shown in books of accounts while fair value of asset is the current price at which that product is selling or sellable in market.
market value, liquidity and volatility
Gross Versus Net ValueFair market value is the price an asset would bring if it were sold on a voluntary basis, meaning neither buyer nor seller has an obligation to make the exchange. Gross fair market value is the fair market value of an asset before allowing for any liabilities such as loans, taxes or liens. Suppose a warehouse has a gross fair market value of $250,000. If the property is collateral for a $100,000 business loan, the net fair market value of the asset becomes $150,000.
Not necessarily. Book value is the basis of the item less accumulated depreciation. Book value is rarely the actual cash value of an item, any item. Book value has to do with accounting and taxes, not sales price or actual cash value.
true