How to Calculate Book Value of an Asset Over Time

What is the formula to calculate the book value of an asset?

Given the initial cost and lifespan of an asset, how can we determine the book value at a specific point in time?

Formula for Calculating Book Value of an Asset:

The book value of an asset can be calculated using the following formula:

Book Value = Initial Cost - (Annual Depreciation x Number of Years)

When determining the book value of an asset over time, it is important to take into account the initial cost, annual depreciation, and number of years the asset will be in use.

By subtracting the accumulated depreciation from the initial cost, you can find out the remaining book value of the asset at any given point in time.

For example, if a truck is purchased for $13,000 and will last for 6 years with an annual depreciation of $2,600, you can calculate the book value in the following way:

Book Value in Year 2 = $13,000 - ($2,600 x 2) = $13,000 - $5,200 = $7,800

Therefore, the book value of the truck after 2 years of use would be $7,800.

By applying the formula and updating the values each year, you can track the depreciation of the asset and determine its book value at different points in time.