[2] However, in practice, depending on the source of the calculation, book value may variably include goodwill, intangible assets, or both.
When intangible assets and goodwill are explicitly excluded, the metric is often specified to be tangible book value.
[citation needed] Monthly or annual depreciation, amortization and depletion are used to reduce the book value of assets over time as they are "consumed" or used up in the process of obtaining revenue.
"Discount on notes payable" is a contra-liability account which decreases the balance sheet valuation of the liability.
[citation needed] Financial assets include stock shares and bonds owned by an individual or company.
A company or corporation's book value, as an asset held by a separate economic entity, is the company or corporation's shareholders' equity, the acquisition cost of the shares, or the market value of the shares owned by the separate economic entity.
A variation of book value, tangible common equity, has recently come into use by the U.S. federal government in the valuation of troubled banks.
The term is also used to distinguish between the market price of any asset and its accounting value which depends more on historical cost and depreciation.
While it can be used to refer to the business' total equity, it is most often used: The issue of more shares does not necessarily decrease the value of the current owner.
While it is correct that when the number of shares is doubled the EPS will be cut in half, it is too simple to be the full story.