What does Book Value mean? Read on to discover the definition & meaning of the term Book Value - to help you better understand the language used in insurance policies.
The value of an organization's assets as carried on the balance sheet in accordance with generally accepted accounting principles (GAAP). The book value for real and personal property is typically the original cost of the property less depreciation. The amount deducted for depreciation is calculated mathematically and may not relate to the actual condition of the property. Since book value is based on the original purchase price and an arbitrary depreciation schedule, it should never be relied on to establish insurable values.
We hope the you have a better understanding of the meaning of Book Value.