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Definition

The original cost of an asset when it was first purchased, less depreciation to date, unless revalued. This is a conservative approach to financial accounting. Some assets like land can appreciate, but are usually shown on the books at the price that was paid for them unless the company has had them re-valued. Intangible assets like goodwill are normally impaired over time and shown at their impaired values. Marketable securities can be re-valued to their current market values - but those values will obviously change daily in the market. Unlisted securities are valued by the board of directors at their fair value. Most companies calculate their net asset value (NAV) and this can be divided by the number of shares in issue to give the NAV per share. This is often compared to the company's current share price, but the danger in this is that the assets might have been over- or under-valued.

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