If asset cost is 200,000 and accumulated depreciation is 40,000, NBV equals?

If asset cost is 200,000 and accumulated depreciation is 40,000, NBV equals?

• A. 240,000
• B. 200,000
• C. 40,000
• D. 160,000

Answer: (D)

Net book value is the amount of an asset’s cost that remains after accounting for depreciation. It’s calculated as cost minus accumulated depreciation. Here, 200,000 minus 40,000 equals 160,000, so the NBV is 160,000. This reflects the asset’s value recorded on the balance sheet, not its current market price. Adding depreciation to cost would overstate the value (240,000), and using only the depreciation amount (40,000) ignores the asset’s original cost.

Net book value is the amount of an asset’s cost that remains after accounting for depreciation. It’s calculated as cost minus accumulated depreciation. Here, 200,000 minus 40,000 equals 160,000, so the NBV is 160,000. This reflects the asset’s value recorded on the balance sheet, not its current market price. Adding depreciation to cost would overstate the value (240,000), and using only the depreciation amount (40,000) ignores the asset’s original cost.