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Written-Down Value Definition
A written-down value refers to the value of an asset after the accumulated depreciation or amortization of the asset has been deducted from the value. In a company’s financial records, the written-down value represents the present value of the assets that the company owns, it is otherwise called the book value or net book value.
Here are the key points you should know about written-down value;
- Written-down value is also called book value or net-book value.
- It represents the present value of an asset after depreciation or amortization has been deducted.
- The current worth of an asset which was previously purchased is determined through the written-down value.
- The written-down value of an asset appears on the balance sheet of a company.
A Little More on What is a Written-Down Value
The net book value or written-down value of a company’s assets is realized after depreciation and amortization vale of the assets have been deducted. Depreciation or amortization can occur through loss of value of assets or when the assets become less productive. Assets are divided into two categories, tangible assets and intangible assets. While tangible assets undergo depreciation, intangible assets undergo amortization.
For accounting purposes, the value of amortization or depreciation of assets are deducted from the value of assets before the written-down value is realized. Hence, written-down value represents the present value of assets after depreciation and amortization values have been subtracted.
Written down value of an asset can be estimated using the amortization method, when this method is used, the book value of an asset is reduced on the company’s balance sheet to a specific time. For intangible assets, their debt value is calculated using the amortization method. Although, amortization methods are more complex than depreciation methods, they are important for determining the current value of intangible assets. Intangible assets cannot be seen physically, common examples are patents, trademarks, and intellectual property. The book value of these assets are reduced on the balance sheet of the company using a specified amortization schedule. When intangible assets are amortized, the company is able to keep adequate records of them through the written-down value.
Written-down value can also be estimated using the diminishing balance method otherwise called depreciation. When the depreciation method is used the value of an asset, especially tangible asset is reduced on the company’s book value by a particular percentage. The written-down value of a depreciated asset is the current value of the asst, this is important for accounting purposes. The depreciated value of an asset determines the current selling price of an asset.
References for “Written-Down Value”
- https://www.investopedia.com › … › Corporate Finance & Accounting › Accounting
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