Financial Glossary
Book Value
Book value is the value of an asset or an entire business as recorded on the accounting books. For a single asset it equals original cost minus accumulated depreciation; for a company it equals total assets minus total liabilities, which is the same as shareholders' or owner's equity. It reflects historical, GAAP-based figures rather than current market price.
Problem & Application
Book value matters when you sell a depreciated asset, refinance, or value a business for a buyer or lender. An STR operator who fully depreciates furniture or a campground owner carrying land and buildings will often find book value sits far below market value, which affects gain calculations on a sale and the equity a bank will lend against. Knowing the gap between book and market keeps your balance sheet honest and your tax planning accurate.
In Short
Book value is the accounting baseline for what you own free and clear, and it is the starting point for measuring gains, equity, and borrowing capacity.