Definition of carrying value
In accounting, book value or carrying value is the value of an asset according to its 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.
Examples of carrying value in the following topics:
- Depreciation affects the carrying value of an asset on the balance sheet.
- The historical cost will equal the carrying value only if there has been no change recorded in the value of the asset since acquisition.
- Therefore, the balance sheet does not show true value of assets.
- Intangible assets like goodwill are shown in the balance sheet at imaginary figures, which may bear no relationship to the market value.
- However, similar internal spending cannot be booked, although it will be recognized by investors who compare a company's market value with its book value.
- Market value is often used interchangeably with open market value, fair value, or fair market value.
- In accounting, book value or carrying value is the value of an asset according to its balance sheet account balance.
- In many cases, the carrying value of an asset and its market value will differ greatly.
- If the asset is valued on the balance at market value, then its book value is equal to the market value.
- Ways of measuring the value of assets on the balance sheet include: historical cost, market value or lower of cost or market.
- Book value is the price paid for a particular asset, while market value is the price at which you could presently sell the same asset.
- Second, the total assets are based on the carrying value of the assets, not the market value.
- If there is a large discrepancy between the carrying and market value of the assets, the ratio could provide misleading numbers.