Book value and Periodic discount rate: Difference between pages

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1. ''Accounting.''
A rate of return - or cost of borrowing - expressed as:


The value as recorded in a company’s books, in other words its accounts including its published balance sheet. 
*The excess of the amount at the end over the amount at the start
*Divided by the amount at the end




Historically, the book value of an asset was generally its original cost less any depreciation or other write-down in value.
==Example==
GBP 1 million is borrowed.  


This was distinct from - and could be very different from - prevailing market value, the fair market price which an asset might be expected to raise if offered for sale. (Or at which a liability might be settled.)
GBP 1.03 million is repayable at the end of the period.  




In order to address the problems arising from differences between book values and market values, accounting practice has moved substantially toward a system of book valuation which is aligned more closely with market values.
The periodic discount rate (d) is:


(End amount - start amount) / End amount


2. ''Record keeping.''
= (1.03 - 1) - 1.03


A value recorded in an internal record of any kind, not necessarily accounting books and records.
= 0.029


Distinguished from the current market value.
= 2.9%




== See also ==
==See also==
* [[Book]]
* [[Book entry]]
* [[Book equity]]
* [[Capital]]
* [[Equity]]
* [[Fair value]]
* [[Historical cost]]
* [[Market/book ratio]]
* [[Market price]]
* [[Market value]]
* [[Market value added]]
* [[Net assets]]
* [[Net book value]]
* [[Return on capital employed]]
* [[Shareholders’ funds]]
* [[Two-way price]]
* [[Write down]]


[[Category:Accounting,_tax_and_regulation]]
*[[Annual effective rate]]
*[[Discount rate]]
*[[Periodic yield]]
*[[Yield]]

Revision as of 10:43, 25 October 2015

A rate of return - or cost of borrowing - expressed as:

  • The excess of the amount at the end over the amount at the start
  • Divided by the amount at the end


Example

GBP 1 million is borrowed.

GBP 1.03 million is repayable at the end of the period.


The periodic discount rate (d) is:

(End amount - start amount) / End amount

= (1.03 - 1) - 1.03

= 0.029

= 2.9%


See also

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