Book value equals

• A. Market Value
• B. Original cost minus accumulated depreciation
• C. Current replacement cost
• D. Net income

Answer: (B)

Book value is the asset’s value shown on the balance sheet. It equals the original cost of the asset minus the accumulated depreciation charged against it. This represents how much of the asset’s cost remains to be expensed over its useful life, not what the asset would fetch in the market or how much it would cost to replace today. Market value would be the price you could sell it for now, which can be higher or lower. Current replacement cost is the amount needed to replace the asset with a new one today. Net income is a profitability measure, not the asset’s carrying value. So the correct definition is original cost minus accumulated depreciation.