Book Value(BV) Example:
Purchased cost of equipment- 50,000
Estimated useful life- 5 years
Salvage value-0.
Annual depreciation expense would be 10,000 (50,000 / 5 years).
Accumulated depreciation- 30,000 (10,000 * 3 years). So BV on the 3rd year is then : 50,000-30,000=20,000
Example-2
A company purchases machinery for 50,000. Over time, the machinery depreciates by 10,000. To calculate the BV of the machinery after depreciation:
BV= 50,000 (Original Cost) – 10,000 (Accumulated Depreciation) = 40,000
Therefore, the BV of the machinery after depreciation is 40,000 (1st year). This represents the remaining value of the asset on the company’s balance sheet after accounting for depreciation.