difference between book value and market value
1 Answer(s)
Pallak
The book value of an asset is its original purchase cost, adjusted for any subsequent changes, such as for impairment or depreciation. Book value is recorded in the accounting records of a business.
Market value is the price that could be obtained by selling an asset on a competitive, open market.
For example, a company buys a machine for $100,000 and subsequently records depreciation of $20,000 for that machine, resulting in net book value of $80,000. If the company were to then sell the machine at its current market price of $90,000, the business would record a gain on the sale of $10,000.
Feb 17 2014 04:35 PM
Market value is the price that could be obtained by selling an asset on a competitive, open market.
For example, a company buys a machine for $100,000 and subsequently records depreciation of $20,000 for that machine, resulting in net book value of $80,000. If the company were to then sell the machine at its current market price of $90,000, the business would record a gain on the sale of $10,000.