Legal Definition and Related Resources of Book Value

The value of anything as shown in books of account ; not necessarily the market value , but it is value after crediting surpluses or losses, or in the case of depreciable capital assets , after deducting the permitted amount of depreciation each year.

A company”s book value is its total assets minus intangible assets and liabilities, such as debt. A company”s book value might be more or less than its market value.

An accounting term. Book value of a stock is determined from a company”s records, by adding all assets then deducting all debts and other liabilities, plus the liquidation price of any preferred issues. The sum arrived at is divided by the number of common shares outstanding and the result is book value per common share. Book value of the assets of a company or a security may have little relationship to market value.

Browse or run a search for Book Value in the American Encyclopedia of Law, the Asian Encyclopedia of Law, the European Encyclopedia of Law, the UK Encyclopedia of Law or the Latin American and Spanish Encyclopedia of Law.

Book Value in Historical Law

You might be interested in the historical meaning of this term. Browse or search for Book Value in Historical Law in the Encyclopedia of Law.

Search for legal acronyms and/or abbreviations containing Book Value in the Legal Abbreviations and Acronyms Dictionary.

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What does Book Value mean in American Law?

The definition of Book Value in the law of the United States, as defined by the lexicographer Arthur Leff in his legal dictionary is:

A term usually used in explicit or implicit contradistinction to the going-concern value or market value of property, especially a business. It is (very roughly) the net value of all assets after all liabilities have been subtracted. Hence, a corporation the balance sheet of which shows total assets of $1,000,000 and total liabilities of $750,000, would have a book value of $250,000; if there were 50,000 shares outstanding, each would have a book value of $5.

As with all valuations based upon business balance sheets, book value is not the most useful measurement of the worth of a reasonably healthy business. Aside from the normal difficulties of valuing individual assets and liabilities (e.g., real property with unrealized gains; contested claims), an operating business” worth is more realistically some function of its earnings (as a going concern), or of the desires of people to acquire it (on the market) than it is some additive function of its individual parts. Only when a business is likely to stop being a going concern, e.g., when it is in deep financial difficulty, does book value become much more interesting, for if the business does go under it may indeed fetch in liquidation no more than the sum of its unintegrated parts.

United States Tax Concept of Book Value

An accounting term which usually refers to a business’ cost of assets minus liabilities. The book value of a stock is determined from a company’s records by adding all assets (generally excluding such intangibles as goodwill), then deducting all debts and other liabilities plus the liquidation price of any preferred stock issued. The sum arrived at is divided by the number of common shares outstanding and the result is the book value per common share. The book value of the assets of a company generally has no significant relationship to the company’s market value.

Concept of Book Value in the context of Real Property

A short definition of Book Value: The value of a property as a capital asset (cost plus additions to value, less depreciation).

Concept of Book Value in the context of Real Property

A short definition of Book Value: The value of a property as a capital asset (cost plus additions to value, less depreciation).