Saturday, December 25, 2010

Adjusted Book Value

What is an adjusted book value?

There are two types of adjusted book value analysis that accountants can perform on assets that a company owns. Tangible Book Value and Economic Book Value (also known commonly as Book Value at Market).

Tangible Book Value = Book value in that it deducts from asset value intangible assets, which are assets that are not physical (e.g., goodwill, patents, capitalized start-up expenses and deferred financing costs). These intangible assets might be hard to value.

Economic Book Value = Book value analysis that adjusts the assets to their current fair market value. This valuation allows the valuation of goodwill, real estate, inventories and other assets at their market value. This might be useful for valuation purposes.

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