book value

Quick Reference

The value which is put on assets in a firm's accounts. This may be the original purchase price, or a revised figure based on a periodic revaluation. It is contrasted with trying to value assets at their current market prices. Book value is often used when the assets are non-marketed, so that regular revaluation would be expensive and unreliable, or where the assets are marketed but their price is volatile, so that ‘marking to market’ would produce very variable valuations. Balance-sheets using book values may conceal either large hidden reserves or undeclared losses in a firm.

Subjects: Economics — Accounting.

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