One can define accounting as the process of systematic recording, measuring, and communicating information about financial transactions.It’s a system that provides quantitative information about a business or a person’s financial position. An even simpler definition of accounting is that it’s the process of tracking assets, liabilities, expenses, revenue, and equity.
Amortization calculates how loans (like fixed-rate mortgages) are allocated towards principal and interest payments over the loan term. It may also refer to an accounting method that expenses the cost of an intangible asset over time on a company’s financial statements. Note: Amortization in accounting is covered below.
When referring to assets, the term book value means the original cost of an asset minus accumulated depreciation.What Is the Book Value of a Company?
Net book value is the net value of an asset carried on its balance sheet. Net book value results from the accounting technique of depreciating or amortizing the value of an asset: a company gradually “uses up” or expenses the cost of a fixed asset over the asset’s useful life.It’s one of several ways to derive a valuation for the asset but it may not equal the market price of the fixed asset. Net book value is an important metric to indicate a minimum/floor value of a company’s assets.