What is the meaning of 'book value'?

'Book value' refers to the value of an asset as it is recorded on a company's balance sheet. This value reflects the original cost of the asset, minus any accumulated depreciation, amortization, or impairment costs that have been recognized. It provides a historical perspective on the value of the asset, which is crucial for accounting purposes and financial reporting.

In contrast to market value, which fluctuates based on supply and demand dynamics in the market, book value remains stable and is determined based on the company's accounting records. Understanding the book value helps investors and analysts evaluate an asset's worth relative to its market price and gauge potential investment opportunities.