To illustrate net book value, let's assume that several years ago a company purchased equipment to be used in its business. The equipment's cost was $100,000 and its accumulated depreciation as of its recent balance sheet date was $40,000. This means that up to the balance sheet date $40,000 of the asset's cost had been reported as Depreciation Expense. It also means that the equipment's net book value is $60,000 ($100,000 of cost minus $40,000 of accumulated depreciation). Net book value or simply book value indicates that $60,000 of the noncurrent asset's cost has not yet been charged to depreciation expense.
Net book value or book value can also be associated with noncurrent assets other than fixed assets. Two examples include long-term investments and unamortized bond issue costs.