Also, called the “carrying value”, the net book value is the value of an asset in the accounts at any given point, calculated by: original value less accumulated depreciation OR previous year’s value less current year’s depreciation. (Ignoring, for the time being, revaluations and so on)
In yesterday’s examples, the net book values would be as [...]
There are several ways of calculating depreciation. Two of the most popular are:
Straight line method
If an asset is bought for £10,000 and it’s useful life is estimated at 10 years (with no residual value at the end of the ten years), then the annual depreciation charge is £10,000 ÷ 10 = £1,000 per year.
Reducing balance [...]
Depreciation is the decrease in value of an asset. It reflects the use of the asset and the passage of time. It spreads the cost of the asset across the years (or more correctly, accounting periods) of it’s useful life.
Capital expenditure is quite simply expenditure on buying or improving an asset (whether that asset be a physical one or not which “provides future benefits” over more than one accounting period).
It is commonly abbreviated to Capex.
