Net book value (NBV) is an asset's original cost minus its accumulated depreciation and any impairment losses: the amount still carried on the balance sheet. A $1,500 laptop with $600 of accumulated depreciation has an NBV of $900. It is also called carrying amount or written-down value.
NBV drives the fixed-asset total on the balance sheet, the gain or loss when you sell something, and the value of anything written off after an audit. It is also widely misunderstood — especially by people who assume it is what the asset would sell for.
This article explains what NBV is, how it is calculated, how it changes over an asset's life, and how to use it correctly for disposals, write-offs and insurance.
The definition
Net book value = Original cost − Accumulated depreciation − Accumulated impairment losses
- Original cost is what was capitalized when the asset was acquired, including directly attributable costs such as delivery and installation.
- Accumulated depreciation is the total depreciation charged since the asset was placed in service.
- Accumulated impairment is any extra write-down recognized because the asset's value dropped suddenly (damage, obsolescence).
NBV is also called carrying amount, carrying value or written-down value, depending on the country and the accounting framework. In IFRS (IAS 16) the term is carrying amount; written-down value is common in the UK, Ireland, Australia and New Zealand, especially for tax.
Need a number now? The free net book value calculator applies this formula to your own asset. Enter the cost and the accumulated depreciation, or let it estimate depreciation from the asset's age and useful life. Add a sale price and it shows the gain or loss on disposal too.
How to calculate net book value
To calculate net book value, subtract the accumulated depreciation and any impairment losses from the asset's capitalized cost. In three steps:
- Take the capitalized cost. Start with the amount recorded when the asset was acquired, including delivery and installation.
- Add up the depreciation charged to date. Total the depreciation from the in-service date to the date you need; that total is the accumulated depreciation.
- Subtract. Take the accumulated depreciation and any impairment losses away from the cost. What is left is the net book value.
The worked example below follows these steps for a laptop. If you need monthly figures, or the asset went into service part-way through your financial year, the free depreciation schedule generator builds the full schedule by year and by month, with a part-year first year.
A worked example
Illustrative numbers.
A laptop is bought for $1,500, placed in service on 1 January 2025, with a salvage value of $300 and a useful life of 3 years, depreciated straight-line monthly.
- Depreciable base: $1,500 − $300 = $1,200
- Annual depreciation: $1,200 ÷ 3 = $400
- Monthly depreciation: $400 ÷ 12 = $33.33 (rounded)
| Date | Months in service | Accumulated depreciation | NBV |
|---|---|---|---|
| 1 Jan 2025 | 0 | $0 | $1,500 |
| 31 Dec 2025 | 12 | $400 | $1,100 |
| 30 Jun 2026 | 18 | $600 | $900 |
| 31 Dec 2026 | 24 | $800 | $700 |
| 31 Dec 2027 | 36 | $1,200 | $300 |
After 36 months the laptop is fully depreciated: its NBV equals its salvage value, $300, and depreciation stops — even if the laptop is still in daily use.
To check one date, such as 30 June 2026, put the cost ($1,500), salvage value ($300), life (3 years) and time in service (1.5 years) into the straight-line mode of the net book value calculator: it returns the same $900. To see every period, use the free depreciation calculator, which builds the full schedule with any of four methods and shows NBV for each year.
NBV under declining balance
Illustrative numbers.
Declining-balance methods reach NBV differently: the rate applies to the opening NBV each year, not to the cost. Take a $10,000 asset with a 5-year life, depreciated double-declining balance at 40% (twice the 20% straight-line rate):
- Year 1: $10,000 × 40% = $4,000 depreciation, NBV $6,000
- Year 2: $6,000 × 40% = $2,400 depreciation, NBV $3,600
- Year 3: $3,600 × 40% = $1,440 depreciation, NBV $2,160
Depreciation stops when NBV reaches the salvage value, even if the rate would take it lower. See straight-line vs declining-balance depreciation for how the two methods compare.
Book value vs salvage value
Book value and salvage value are easy to confuse because both are "what is left" of an asset, but they answer different questions:
- Book value (NBV) is a running figure. It starts at cost and falls every period as depreciation is charged. On any given date it tells you how much of the cost has not yet been expensed.
- Salvage value (also called residual value or scrap value) is a fixed estimate made when the asset is placed in service: what you expect to get for it at the end of its useful life. It does not fall over time; it sets the floor that book value depreciates down to.
In other words, salvage value is an input to the depreciation calculation, and book value is the output.
Worked example (illustrative numbers): a delivery van costs $40,000, with an estimated salvage value of $8,000 and a useful life of 5 years, depreciated straight-line.
- Depreciable base: $40,000 − $8,000 = $32,000
- Annual depreciation: $32,000 ÷ 5 = $6,400
| End of year | Accumulated depreciation | Book value (NBV) | Salvage value |
|---|---|---|---|
| 0 (purchase) | $0 | $40,000 | $8,000 |
| 1 | $6,400 | $33,600 | $8,000 |
| 2 | $12,800 | $27,200 | $8,000 |
| 3 | $19,200 | $20,800 | $8,000 |
| 4 | $25,600 | $14,400 | $8,000 |
| 5 | $32,000 | $8,000 | $8,000 |
Book value falls by $6,400 a year; salvage value stays at $8,000 throughout. At the end of year 5 the two meet, and depreciation stops. If the van is then sold for $9,500, the gain on disposal is $9,500 − $8,000 = $1,500 — because the gain is measured against book value, not against the original salvage estimate.
Two practical points follow:
- Salvage value is reviewed, not tracked. If the estimate changes (for example, used-van prices fall), you revise it and spread the remaining depreciable amount over the remaining life. You do not recalculate past years.
- Some methods treat salvage value differently. Declining-balance methods apply their rate to opening book value and simply stop at salvage value; see straight-line vs declining-balance depreciation.
Asetavo stores cost, salvage value, useful life and method on each asset and calculates book value every period — see depreciation in Asetavo.
Net book value on the balance sheet
Net book value is the figure at which fixed assets appear on the balance sheet. Property, plant and equipment is shown at cost less accumulated depreciation and any impairment, and the net figure is the total NBV of the fixed assets. Some balance sheets show gross cost, accumulated depreciation and the net amount on the face; others show only the net figure and give the breakdown in the notes.
Illustrative numbers.
| Property, plant and equipment | Amount |
|---|---|
| At cost | $120,000 |
| Less: accumulated depreciation | ($45,000) |
| Net book value | $75,000 |
That net total should agree with the sum of the NBVs in your fixed asset register. If the two differ, find out why before you close the period: see asset reconciliation.
NBV is not market value
NBV is an accounting allocation, not a valuation. It tells you how much of the original cost has not yet been expensed. It says nothing directly about:
- Market value — what someone would pay for the asset today.
- Replacement cost — what it would cost to buy an equivalent new asset.
- Insured value — which is usually based on replacement cost, not NBV.
A well-maintained machine may sell for much more than its NBV. A three-month-old laptop dropped in a river is worth nothing, whatever its NBV says. This is why insurance schedules and disposal decisions should not rely on NBV alone.
Using NBV when you dispose of an asset
When an asset is sold, scrapped or donated, you:
- Charge depreciation up to the disposal date (according to your convention).
- Remove the asset's cost and accumulated depreciation from the books.
- Recognize a gain or loss on disposal = Proceeds − NBV at disposal.
Continuing the example: the laptop is sold on 30 June 2026 for $700. NBV at that date is $900.
Gain/(loss) = $700 − $900 = ($200) — a loss of $200.
If it had been sold for $1,000 instead, the result would be $1,000 − $900 = $100 gain. If it is scrapped for nothing, the loss equals the full NBV, $900.
You can check a disposal before you agree a price: enter the asset in the net book value calculator with the offered sale price, and it shows the gain or loss you would record.
Using NBV for audit write-offs
Writing an asset off removes its remaining net book value from the balance sheet and records that amount as a loss, so its NBV becomes zero. When a physical audit confirms that an asset is genuinely missing, it is written off (see what a write-off means). The loss recognized is its NBV at the write-off date. That is why reconciliation reports usually show missing assets at NBV, not at cost — it is the figure that will actually hit the income statement. See asset reconciliation for the process.
It is also why ghost assets — recorded but no longer present — matter. Until they are written off, they overstate NBV on the balance sheet and continue to attract depreciation.
Impairment
Sometimes an asset loses value faster than depreciation reflects: a machine is damaged, a technology becomes obsolete, or a site closes. Accounting frameworks require an impairment write-down when the asset's carrying amount exceeds what can be recovered from it. The exact test differs between frameworks (for example, IFRS and US GAAP use different approaches), so involve your accountant.
Illustrative example: a machine with cost $50,000 and accumulated depreciation $20,000 has an NBV of $30,000. After damage, its recoverable amount is assessed at $18,000. An impairment loss of $30,000 − $18,000 = $12,000 is recognized, and NBV becomes $18,000. Future depreciation is then based on the new $18,000 carrying amount over the remaining useful life.
Book NBV vs tax NBV
Many organizations depreciate the same asset twice: once for the financial statements (book) and once under tax rules. Because the methods and lives differ, the asset has two different NBVs at any moment — the tax figure is often called the tax written-down value or tax basis. The difference between them feeds deferred tax calculations. The key operational point is to keep both schedules against the same asset record, so they never drift apart in scope.
Why NBV goes wrong
- Disposals not recorded — NBV stays on the books for assets that are gone.
- Additions capitalized late — depreciation starts in the wrong period.
- Wrong in-service date — depreciation starts from invoice date instead of when the asset was actually ready for use.
- Spreadsheet formula drift — a copied formula, a hard-coded value, a deleted row.
- Book and tax mixed up — one schedule overwriting the other.
Every one of these is an operational problem before it is an accounting one. It starts with a register that matches reality.
NBV in Asetavo
In Asetavo, every capitalized asset in the register carries its cost, salvage value, useful life and method, and the depreciation module keeps NBV correct: compute runs are drafts that do not change NBV until posted, and only the book profile changes NBV — the tax profile is report-only with its own running total. Disposals record gain or loss against NBV, and valuation reports export to Excel or CSV for your accounting system.
Next: work out an asset's NBV with the net book value calculator, compare methods in straight-line vs declining-balance depreciation, or build a full schedule with the depreciation calculator.
