Book value of an asset is calculated as original cost minus what?

• A. Accumulated depreciation
• B. Market value
• C. Replacement cost
• D. Salvage value

Answer: (A)

Book value is the net amount an asset is carried for on the balance sheet. It reflects the original cost minus the depreciation that has accumulated over time. In other words, you start with what you paid for the asset and subtract all the depreciation expense that has been recorded since purchase. This leaves the current value of the asset on the books.

Why the other ideas don’t fit: market value is the price you could get if you sold the asset today, which isn't the accounting value. replacement cost is what it would cost to acquire a similar asset now, not the recorded value of the existing asset. salvage value is the estimated resale value at the end of the asset’s life and is used in calculating depreciation, but isn’t subtracted from cost to determine book value at a given moment.