Book Value means the value at which the assets and other items are shown in balance sheet on a particular date. Since some fixed assets are subject to the depreciation then the book value of that asset will be the cost minus accumulated depreciation. The book value plays very important role in case of determination of the book value of a share. The book value of a share is calculated as follows:-
1. Calculate total book value of the assets minus all liabilities and preference shares.
2. The balance will be equity shareholder’s fund.
3. If we divide this balance amount i.e. equity shareholder’s fund by the number of equity shares issued, the result will be the book value of a share.
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