Net Book Value

The cost of a fixed asset minus accumulated depreciation. It reflects the asset's value as recorded in the company's books.


•   Depreciation Example: A company buys machinery for £20,000 with a useful life of 10 years. It is depreciated at £2,000 per year, so after five years, the net book value is £10,000.

Real-Life Scenario:

A company buys a vehicle for £15,000 and depreciates it over five years. After three years, the vehicle’s net book value is £6,000.