Net book value is what an asset is worth on the books. It starts at the asset's capitalized cost and falls each period by the depreciation charged, until it reaches the asset's salvage value. Under IFRS the same figure is called the carrying amount; in the UK you will also hear written-down value.
The formula
Worked example
A packaging machine costs $50,000, has a salvage value of $5,000 and a useful life of 10 years, depreciated straight-line.
| End of year | Accumulated depreciation | NBV |
|---|---|---|
| 0 (purchase) | $0 | $50,000 |
| 1 | $4,500 | $45,500 |
| 4 | $18,000 | $32,000 |
| 10 | $45,000 | $5,000 |
NBV vs market value
NBV is an accounting allocation, not a price. A well-maintained machine can be worth more than its NBV; a laptop can be worth less. The difference only becomes real when the asset is sold or written off — at which point it becomes a gain or loss — or when there are signs of impairment, when the carrying amount may have to be written down to its recoverable amount.
NBV on disposal
When an asset is sold or scrapped, the gain or loss is the proceeds minus NBV at that date.
Why NBV matters
- Balance sheet — the total NBV of fixed assets is what appears as property, plant and equipment.
- Disposals — it determines the gain or loss when an asset leaves the business.
- Write-offs — a lost or scrapped asset's remaining NBV becomes a loss (see write-off).
- Audits — auditors test that assets carried at an NBV physically exist; ghost assets overstate NBV.
- Replacement planning — assets near zero NBV are often (not always) near the end of their life.
Book NBV vs tax written-down value
If you depreciate an asset differently for tax — for example using MACRS or capital allowances — its tax value will differ from its book NBV. The difference is a temporary difference that gives rise to deferred tax. See book vs tax depreciation.
Try the numbers yourself in our free depreciation calculator.
NBV in Asetavo
Asetavo keeps NBV on every asset from its cost, method, salvage value and in-service date. Depreciation runs are computed as drafts and only change NBV when you post the book run; the tax profile keeps its own running value without touching book NBV. Disposals record gain or loss against NBV, and valuation and NBV reports export to Excel or CSV.
