Engineering

How to Calculate and Solve for Book Value | Straight line Method | Depreciation.

Last Updated on June 12, 2020

The image above represents book value.

To compute for book value, four essential parameters are needed and these  parameters are present amount or worth (P), salvage value (S), total estimated life of the asset (N) and number of years of the asset (t).

The formula for calculating book value:

B = P – ((P – S)t / N)

Where;

B = Book value over a period of time
P = Present amount or worth
S = Salvage value
N = Total estimated life of an asset
t = Number of years of the asset

Let’s solve an example;
Find the book value when the present amount or worth is 12, the salvage value is 10, total estimated life of an asset is 8 and the number of years of the asset is 14.

This implies that;

P = Present amount or worth = 12
S = Salvage value = 10
N = Total estimated life of an asset = 8
t = Number of years of the asset = 14

B = P – ((P – S)t / N)
B = 12 – ((12 – 10)14 / 8)
B = 12 – ((2)14 / 8)
B = 12 – (28 / 8)
B = 12 – 3.5
B = 8.5

Therefore, the book value is ₦8.5

Calculating the Present Amount or Worth when the Book Value, the Salvage Value, the Total Estimated Life of the Asset and the Number of years of the Asset is Given.

P = – (B x N / t) – S

Where;

P = Present amount or worth
B = Book value over a period of time
S = Salvage value
N = Total estimated life of an asset
t = Number of years of the asset

Let’s solve an example;
Find the present amount or worth when the book value is 20, the salvage value is 10, the total estimated life of an asset is 5 and the number of years of the asset is 9.

This implies that;

B = Book value over a period of time = 20
S = Salvage value = 10
N = Total estimated life of an asset = 5
t = Number of years of the asset = 9

P = – (B x N / t) – S
P = – (20 x 5 / 9) – 10
P = – (100 / 9) – 10
P = – 11.11 – 10
P = 1.11

Therefore, the present amount or worth is 1.11.

Calculating the Salvage Value when the Book Value, the Present Amount or Worth, the Total Estimated life of the Asset and the Number of years of the Asset is Given.

S = ((B – P)N / t) – P

Where;

S = Salvage value
B = Book value over a period of time
P = Present amount or worth
N = Total estimated life of an asset
t = Number of years of the asset

Let’s solve an example;
Find the salvage value when the book value is 15, the present amount or worth is 10, the total estimated life of an asset is 4 and the number of years of the asset is 2.

This implies that;

B = Book value over a period of time = 15
P = Present amount or worth = 10
N = Total estimated life of an asset = 4
t = Number of years of the asset = 2

S = ((B – P)N / t) – P
S = ((15 – 10)4 / 2) – 10
S = ((5)4 / 2) – 10
S = (20 / 2) – 10
S = 10 – 10
S = 0

Therefore, the salvage value is 0.

Calculating the Number of Years of the Asset when the Book Value, the Present Amount or Worth, Salvage Value and the Total Estimated Life of an Asset is Given.

t = (B – P)N / P + S

Where;

t = Number of years of the asset
B = Book value over a period of time
P = Present amount or worth
S = Salvage value
N = Total estimated life of an asset

Let’s solve an example;
Find the Number of years of the asset when the book value is 24, the present amount or worth is 14, the salvage value is 4 and the total estimated life of an asset is 3.

This implies that;

B = Book value over a period of time = 24
P = Present amount or worth = 14
S = Salvage value = 4
N = Total estimated life of an asset = 3

t = (B – P)N / P + S
t = (24 – 14)3 / 14 + 4
t = (10)3 / 18
t = 30 / 18
t = 1.667

Therefore, the number of years of the asset is 1.667.

Calculating the Total Estimated life of the Asset when the Book Value, the Present Amount or Worth, the Salvage Value and the Number of years of the Asset is Given.

N = (P + S)t / B – P

Where;

N = Total estimated life of an asset
B = Book value over a period of time
P = Present amount or worth
S = Salvage value
t = Number of years of the asset

Let’s solve an example;
Find the total estimated life of an asset when the book value is 30, the present amount or worth is 12, the salvage value is 10 and the number of years of the asset is 7.

This implies that;

B = Book value over a period of time = 30
P = Present amount or worth = 12
S = Salvage value = 10
t = Number of years of the asset = 7

N = (P + S)t / B – P
N = (12 + 10)7 / 30 – 12
N = (22)7 / 18
N = 154 / 18
N = 8.55

Therefore, the total estimated life of an asset is 8.55.

Nickzom Calculator – The Calculator Encyclopedia is capable of calculating the book value.

To get the answer and workings of the book value using the Nickzom Calculator – The Calculator Encyclopedia. First, you need to obtain the app.

You can get this app via any of these means:

Web – https://www.nickzom.org/calculator-plus

To get access to the professional version via web, you need to register and subscribe for NGN 1,500 per annum to have utter access to all functionalities.
You can also try the demo version via https://www.nickzom.org/calculator

Android (Paid) – https://play.google.com/store/apps/details?id=org.nickzom.nickzomcalculator
Android (Free) – https://play.google.com/store/apps/details?id=com.nickzom.nickzomcalculator
Apple (Paid) – https://itunes.apple.com/us/app/nickzom-calculator/id1331162702?mt=8
Once, you have obtained the calculator encyclopedia app, proceed to the Calculator Map, then click on Economics under Engineering.

Now, Click on Depreciation under Economics

Now, Click on Book Value under Depreciation

The screenshot below displays the page or activity to enter your values, to get the answer for the book value according to the respective parameters which are the present amount or worth (P), salvage value (S), total estimated life of the asset (N) and number of years of the asset (t).

Now, enter the values appropriately and accordingly for the parameters as required by the present amount or worth (P) is 12, salvage value (S) is 10, total estimated life of the asset (N) is 8 and number of years of the asset (t) is 14.

Finally, Click on Calculate


As you can see from the screenshot above, Nickzom Calculator– The Calculator Encyclopedia solves for the book value and presents the formula, workings and steps too.

2 thoughts on “How to Calculate and Solve for Book Value | Straight line Method | Depreciation.

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