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From Wikipedia

Book value

In accounting, book value or carrying value is the value of an asset appears in balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made against the asset. Traditionally, a company's book value is its total assets minus intangible assets and liabilities. However, in practice, depending on the source of the calculation, book value may variably include goodwill, intangible assets, or both. When intangible assets and goodwill are explicitly excluded, the metric is often specified to be "tangible book value".

In the United Kingdom, the term net asset value may refer to the book value of a company.

Asset book value

An asset's initial book value is its actual cash value or its acquisition cost. Cash assets are recorded or "booked" at actual cash value. Assets such as buildings, land and equipment are valued based on their acquisition cost, which includes the actual cash cost of the asset plus certain costs tied to the purchase of the asset, such as broker fees. Not all purchased items are recorded as assets; incidental supplies are recorded as expenses. Some assets might be recorded as current expenses for tax purposes. An example of this is assets purchased and expensed under Section 179 of the US tax code.

Depreciable, amortizable and depletable assets

Monthly or annual depreciation, amortization and depletion are used to reduce the book value of assets over time as they are "consumed" or used up in the process of obtaining revenue. These non-cash expenses are recorded in the accounting books after a trial balance is calculated to ensure that cash transactions have been recorded accurately. Depreciation is used to record the declining value of buildings and equipment over time. Land is not depreciated. Amortization is used to record the declining value of intangible assets such as patents. Depletion is used to record the consumption of natural resources.

Depreciation, amortization and depletion are recorded as expenses against a contra account. Contra accounts are used in bookkeeping to record asset and liability valuation changes. "Accumulated depreciation" is a contra-asset account used to record asset depreciation.

Sample general journal entry for depreciation

  • Depreciation expenses: building... debit = $150, under expenses in retained earnings
  • Accumulated depreciation: building... credit = $150, under assets

The balance sheet valuation for an asset is the asset's cost basis minus accumulated depreciation. Similar bookkeeping transactions are used to record amortization and depletion.

"Discount on notes payable" is a contra-liability account which decreases the balance sheet valuation of the liability.

When a company sells (issues) bonds, this debt is a long-term liability on the company's balance sheet, recorded in the account Bonds Payable based on the contract amount. After the bonds are sold, the book value of Bonds Payable is increased or decreased to reflect the actual amount received in payment for the bonds. If the bonds sell for less than face value, the contra account Discount on Bonds Payable is debited for the difference between the amount of cash received and the face value of the bonds.

Net asset value

In the United Kingdom, the term net asset value may refer to book value.

A mutual fund is an entity which primarily owns "financial assets" or capital assets such as bonds, stocks and commercial paper. The net asset value of a mutual fund is the market value of assets owned by the fund minus the fund's liabilities. This is similar to shareholders' equity, except the asset valuation is market-based rather than based on acquisition cost. In financial news reporting, the reported net asset value of a mutual fund is the net asset value of a single share in the fund. In the mutual fund's accounting records, the financial assets are recorded at acquisition cost. When assets are sold, the fund records a capital gain or capital loss.

Financial assets include stock shares and bonds owned by an individual or company. These may be reported on the individual or company balance sheet at cost or at market value.

Corporate book value

A company or corporation's book value, as an asset held by a separate economic entity, is the company or corporation's shareholders' equity, the acquisition cost of the shares, or the market value of the shares owned by the separate economic entity.

A corporation's book value is used in fundamental financial analysis to help determine whether the market value of corporate shares is above or below the book value of corporate shares. Neither market value nor book value is an unbiased estimate of a corporation's value. The corporation's bookkeeping or accounting records do not generally reflect the market value of assets and liabilities, and the market or trade value of the corporation's stock is subject to variations.

Tangible Common Equity

A more obscure variation of book value, tangible common equity, has recently come into use by the U.S. Federal Government in the valuation of troubled banks. Tangible common equity is calculated as total book value minus intangible assets, goodwill, and preferred equity, and can thus be considered the most conservative valuation of a company and the best approximation of its value should it be forced to liquidate.

Since tangible common equity subtracts preferred equity from the tangible book value, it does a better job estimating what the value of the company is to holders of specifically common stock compared to standard calculations of book value.

Stock pricing book value

To clearly distinguish the market price of shares from the core time value of money and other factors such as investment risk. Present value calculations are widely used in business and economics to provide a means to compare cash flows at different times on a meaningful "like to like" basis.

Background

If offered a choice between $100 today or $100 in one year and there is a positive real interest rate throughout the year ceteris paribus, a rational person will choose $100 today. This is described by economists as Time Preference. Time Preference can be measured by auctioning off a risk free security - like a US Treasury bill. If a $100 note, payable in one year, sells for $80, then the present value of $100 one year in the future is $80. This is because you can invest your money today in a bank account or any other (safe) investment that will return you interest.

An investor who has some money has two options: to spend it right now or to save it. But the financial compensation for saving it (and not spending it) is that the money value will accrue through the interest that he or she will receive from a borrower (the bank account on which he has the money deposited).

Therefore, to evaluate the real value of an amount of money today after a given period of time, economic agents compound the amount of money at a given (interest) rate. Most actuarial calculations use the risk-free interest rate which corresponds the minimum guaranteed rate provided by your bank's saving account for example. If you want to compare your change in purchasing power, then you should use the real interest rate (nominal interest rate minus inflation rate).

The operation of evaluating a present value into the future value is called a capitalization (how much $100 today are worth in 5 years?). The reverse operation—evaluating the present value of a future amount of money—is called a discounting (how much $100 that I will receive in 5 years—at a lottery for example—are worth today?).

It follows that if one has to choose between receiving $100 today and $100 in one year, the rational decision is to choose the $100 today. If the money is to be received in one year and assuming the savings account interest rate is 5%, the person has to be offered at least $105 in one year so that two options are equivalent (either receiving $100 today or receiving $105 in one year). This is because if you cash $100 today and deposit in your savings account, you will have $105 in one year.

Calculation

The most commonly applied model of the time value of money is compound interest. To someone who can lend or borrow for \,t\, years at an interest rate \,i\, per year (where interest of "5 percent" is expressed fully as 0.05), the present value of the receiving \,C\, monetary units \,t\, years in the future is:

C_t = C(1 + i)^{-t}\, = \frac{C}{(1+i)^t} \,

This is also found from the formula for the future value with negative time.

The purchasing power in today's money of an amount C of money, t years into the future, can be computed with the same formula, where in this case i is an assumed future inflation rate.

The expression \,(1 + i)^{-t} enters almost all calculations of present value. Where the interest rate is expected to be different over the term of the investment, different values for \,i\, may be included; an investment over a two year period would then have PV of:

\mathrm{PV} = \frac{C}{(1+i_1)(1+i_2)} \,

Technical details

Present value is additive. The present value of a bundle of cash flows is the sum of each one's present value.

In fact, the present value of a cashflow at a constant interest rate is mathematically the same as the Laplace transform of that cashflow evaluated with the transform variable (usually denoted "s") equal to the interest rate. For discrete time, where payments are separated by large time periods, the transform reduces to a sum, but when payments are ongoing on an almost continual basis, the mathematics of continuous functions can be used as an approximation.

Choice of interest rate

The interest rate used is the risk-free interest rate. If there are no risks involved in the project, the rate of return from the project must equal or exceed this rate of return or it would be better to invest the capital in these risk free assets. If there are risks involved in an investment this can be reflected through the use of a risk premium. The risk premium required can be found by comparing the project with the rate of return required from other projects with similar risks. Thus it is possible for investors to take account of any uncertainty involved in various investments.

Annuities, perpetuities and other common forms

Many financial arrangements (including bonds, other loans, leases, salaries, membership dues, annuities, straight-line depreciation charges) stipulate structured payment schedules, which is to say payment of the same amount at regular time intervals. The term "annuity" is often used to refer to any such arrangement when discussing calculation of present value. The expressions for the present value of such payments are summations of geometric series.

A cash flow stream with a limited number (n) of periodic payments (C), receivable at times 1 through n, is an annuity. Future payments are discounted by the periodic rate of interest (i). The present value of this ordinary annuity is determined with this formula:

PV \,=\,\frac{C}{i}\cdot[1-\frac{1}{\left(1+i\right)^n}] \mathrm = {C}\frac{1-(1+i)^{-n}}{i} \,

where:

\,n\, = number of years

\,C\, = Amount of cash flows

This formula is usable when the cash flows are spread over the different but in equal intervals and also the amount of these flows is s

Absolute value

In mathematics, the absolute value (or modulus) |a| of a real numbera is as numerical value without regard to its sign. So, for example, 3 is the absolute value of both 3 and −3.

Generalizations of the absolute value for real numbers occur in a wide variety of mathematical settings. For example an absolute value is also defined for the complex numbers, the quaternions, ordered rings, fields and vector spaces. The absolute value is closely related to the notions of magnitude, distance, and norm in various mathematical and physical contexts.

Terminology and notation

Jean-Robert Argand introduced the term "module" 'unit of measure' in French in 1806 specifically for the complex absolute value and it was borrowed into English in 1866 as the Latin equivalent "modulus". The term "absolute value" has been used in this sense since at least 1806 in French and 1857 in English. The notation | a | was introduced by Karl Weierstrass in 1841. Other names for absolute value include "the numerical value" and "the magnitude".

Definition and properties

Real numbers

For any real numbera the absolute value or modulus of a is denoted by | a | (a vertical bar on each side of the quantity) and is defined as

|a| = \begin{cases} a, & \mbox{if } a \ge 0 \\ -a, & \mbox{if } a < 0. \end{cases}

As can be seen from the above definition, the absolute value of a is always either positive or zero, but never negative. The same notation is used with sets to denote cardinality; the meaning depends on context.

From an analytic geometry point of view, the absolute value of a real number is that number's distance from zero along the real number line, and more generally the absolute value of the difference of two real numbers is the distance between them. Indeed the notion of an abstract distance function in mathematics can be seen to be a generalization of the absolute value of the difference (see "Distance" below).

Since the square-root notation without sign represents the positive square root, it follows that

which is sometimes used as a definition of absolute value.

The absolute value has the following four fundamental properties:

Other important properties of the absolute value include:

If b > 0, two other useful properties concerning inequalities are:

|a| \le b \iff -b \le a \le b
|a| \ge b \iff a \le -b \mbox{ or } b \le a

These relations may be used to solve inequalities involving absolute values. For example:

Absolute value is used to define the absolute difference, the standard metric on the real numbers.

Complex numbers

Since the complex numbers are not ordered, the definition given above for the real absolute value cannot be directly generalized for a complex number. However the identity given in equation (1) above:

|a| = \sqrt{a^2}

can be seen as motivating the following definition.

For any complex number

z = x + iy,\,

where x and y are real numbers, the absolute value or modulus of z is denoted |z| and is defined as

|z| = \sqrt{x^2 + y^2}.

It follows that the absolute value of a real number x is equal to its absolute value considered as a complex number since:

|x + i0| = \sqrt{x^2 + 0^2} = \sqrt{x^2} = |x|.

Similar to the geometric interpretation of the absolute value for real numbers, it follows from the Pythagorean theorem that the absolute value of a complex number is the distance in the complex plane of that complex number from the origin, and more generally, that the absolute value of the difference of two complex numbers is equal to the distance between those two complex numbers.

The complex absolute value shares all the properties of the real absolute value given in (2)–(10) above. In addition, If

z = x + i y = r (\cos \phi + i \sin \phi ) \,

and

\overline{z} = x - iy

is the complex conjugate of z, then it is easily seen that

\begin{align} |z| & = r, \\ |z| & = |\overline{z}|\end{align}

and

|z| = \sqrt{z\overline{z}},

with the last formula being the complex analogue of equation (1) mentioned above in the real case.

The absolute square of z is defined as

|z|^2 = z\overline{z} = x^2 + y^2.

Since the positive reals form a subgroup of the complex numbers under multiplication, we may think of absolute value as an endomorphism of the multiplicative group of the complex numbers.

Absolute value functions

The real absolute value function is continuous everywhere. It is differentiable everywhere except for x = 0. It is monotonically decreasing on the interval (−∞, 0] and monotonically increasing on the interval [0, ∞). Since a real number and its negative have the s


From Yahoo Answers

Question:Those testings to determine those values are just differentiate by heating process, sap value test have heating process,but not acid value, other than that? In term of reaction, I think they're same, both value determine how many acids neutralize with 1 gram of KOH, so, what's the difference? Please help me, so confuse.....

Answers:I don't know, however saponification is the use of an alkali and fats to make soap.

Question:"Facebook", "Home" and "New Feed" and "wall to wall" ? who gets to see what? and with "new feed" are they all texing me? or they are just posting something on their own page and I am just seeing their activities on my site?? I am so confused.

Answers:When you click facebook and home, it brings you to the same place. It brings you to the facebook home page. This page contains news feeds which are status updates. The status updates are what people are usually doing or something about them. However, now status updates can tag people by using the @ and then writing the person's name. This will cause the status post to end up on the tagged person's wall. The wall to wall is when your friend and you are having a conversation. It is like them talking to you and everyone can see it. It is basically a conversation that is not cleared between two people (you and your friend). facebook is a bit confusing at first but you will get used to it after a while. Good luck :)

Question:please no stupid answers about the fact that one is red and one is blue. but i'm a beginning coin collector and both have been recommended to me, but I do not know which is better to buy: The Official Red Book: A Guide Book of United States Coins 2009 or Blue Book of U.S. Coin Values thanks!

Answers:The Red Book has a lot more information and gives the prices that the coins sell for. The Blue Book is the values the dealers will pay. The Red Book is a wealth of info on the different series of coins. It tells where the mint marks are as well as a quick guide to grading and numismatics. Neither book actually has values that are correct. The reason is coins change faster than the either book. The 2009 Red Book is out but it is only 2008. They are good for the info but a monthly price guide comes in handy such as Coin values. There are also 2 magazines that come out weekly, they are Coin World and Numismatic News. With Numismatic news on the first of the month issue is a U.S. price guide. With Coin World the guide is a magazine and costs extra. I would get the Red Book if I were you for it has a lot more info in it. The values are just a guide though and take them that way. If I can be of further help email me.

Question:which one is better if you are starting your own business. also how much time you need to have to cash it out all the money from the term life insurance. Moreover, what are the advantages and disadvantages of both of these options?

Answers:Term Life Insurance is insurance that pays the 'sum insured' in the event of the death of the 'life insured' to a designated beneficiary, if the death occurs during the Term of the insurance contract. In other words, you are only insured during the life of the contract. Typically, these Terms can be found for 1 Year, 5 years, 10 years, 20 years. Alternatively, depending on the jurisdiction, you may find terms that last until a certain age (e.g. Term 80, 85, 100). The longer the term, the higher the premiums. Term insurance doesn't have any cash values (though some hybrids may include a rider that includes some additional benefits). You cannot 'Cash in' a traditional term insurance policy. Should you outlive the Term (i.e. the insurance expires), you will lose all your premiums. Some of the more interesting riders include: Guaranteed Renewable, and Convertibility. Renewability usually means that you won't have to pass a medical to be insured, though the premiums may be way higher. Convertibility means that you have the option to convert your policy to a different form of insurance (e.g. whole life). This may be an advantage if you initially were focused on low premiums, and then decided that you preferred accumulated cash values and an extended term. This may happen when you discover, later on, that you have a medical condition that would either raise your rates or render you uninsurable. The advantages include: Low premiums, simplicity, convertibility. Disadvantages: expiry of term (uninsured past a certain date), late premiums are not tolerated and leads to loss of insurance. Insurance with cash values come in many forms. Usually, Whole Life calculates cash values based on prevailing interest rates (very low right now). Whole Life has many riders including: Child rider, Disability (i.e. insurer pays your premiums while you're disabled), Accidental Death & Dismemberment, Dividend Participation Rider, Paid-Up insurance, Term rider (e.g. 100K whole life plus an additional $50 000 Term 20 years -- popular for those buying a home). You can rarely touch the entire cash value amount, but you could borrow against the cash value either directly -- through the insurer -- or through a third party like a bank. If borrowing from a bank, they will usually want the policy to be assigned to them and/or have the policy assign them as the beneficiary. Universal Life is a modern Hybrid insurance model. It contains two components: Insurance Policy and Cash Values. The insurance portion is usually a Term Life policy. T100 or Term to 100 years old is a very popular choice. For the Cash Value portion, you could chose a mixture of Interest, dividends, and index instruments. Index instruments reflect a chosen Stock Market Index (e.g. S&P 500, Dow Jones 30, World Index). With these various investment options, it is possible to increase your rate of return and potentially accumulate high cash values. For a Universal Life (UL) Policy, your premium has two components: the basic premium plus the optional contribution. The basic premium covers the insurance component. The Total Premium can never be lower than the cost of insurance. The optional contribution is the amount that you may decide to contribute over and above your basic premium. This will constitute your future cash values. Many jurisdictions have an Upper Limit on how much you may contribute in excess of your basic premium. The reason is that Payouts, upon death of the insured, are usually tax-free, therefore there is a huge incentive to pad your cash values for estate-planning and tax-free ccompounding reasons. As for Advantages, for the above-mentioned reasons, UL is very compelling. You can: accumulate high cash-values, grow cash values with stock-market like returns, grow tax-free, etc. Also, many of the riders, but not all, of whole life policies may be available to you. You may also have many Terms in one UL policy, at the same time (T100 for estate planning, T20 for mortgage or business-life purposes). The premiums would lessen once the shorter term expired. Like Whole Life, you may be able to borrow against your cash values Also, UL is flexible: Once you have accumulated some cash value, you may instruct your insurer to deduct any late premiums from your cash values. This is useful when cash is tight, and the business cycle is hurting your business. Furthermore, you may accumulate enough cash values, after a certain number of years, to self-finance your premiums. For example: if you put substantial amounts in cash values, you could stop paying premiums in 20 years or so. Disadvantages: Less riders than Whole Life. Similar disadvantages as Term insurance depending on Term chosen for your policy. May face substantial tax penalties if you cash in some of your cash values. Cash values can decline when using indexed funds for cash values. Note: Cash surrender values are not the same as Cash Values. Cash Values are the amounts, in addition to the Covered Amount, that will paid out to your beneficiaries in the event of your death. Cash Surrender Values are amounts that the insurer will pay you if you Cash In (stop the insurance) your policy. Cash surrender values are usually lower and increase with age. Finally, consult your accountant. The biggest saving that you may enjoy is that of paying your premiums through your company, and having the beneficiary be a member of your family. This is a way of avoiding taxes. If you take money out of your company to pay your premiums, you will pay taxes on that money, and put the net amount towards your premiums. However, if your company owns the policy, you could pay the premiums directly from your company's cash, and then your estate or beneficiary will eventually receive the money tax-free. Combined with high 'Optional Contributions', this can be a way of reducing taxes and/or getting money out of your company tax-free. The rules and procedures of this strategy vary from jurisdiction to jursidiction; do ask a competent insurance agent or accountant how to proceed with your insurance premiums. PS: I am not responsible for any and all Errors & Ommissions in this entire text. The terminology I used here is unofficial. I tried to use common explanatory words to illustrate your options. Your policy's terminology may differ. Consult your local expert before subscribing to any policy.