Net Book Value (NBV) refers to the accounting value of an asset as recorded on a company's balance sheet. NBV is calculated by subtracting the accumulated depreciation, amortization, or any impairment charges from the original purchase cost of the asset. For example, if a company purchases machinery for $50,000 and records depreciation of $5,000 annually, then after two years, the NBV of the machinery would be $40,000. This value reflects the asset's book-evaluated worth at a specific point in time, not its market value. In practical terms, NBV helps companies understand the remaining value of their assets over time, which is useful for financial planning and analysis. For instance, while budgeting for replacement equipment, a company might refer to the NBV of existing machinery to assess current value and future depreciation costs.