Carrying Value

What is the Carrying Value?

Carrying value is an accounting concept and is the value the assets are shown at in the balance sheet of a business. The carrying value is normally the original cost less any depreciation or permanent reduction in value of the asset.

As it is based on the original cost of the asset, the carrying value will be different than the current market value of the asset.

For example, an asset purchased at £4,000 and depreciated at 20% per year on a straight line basis, will have a carrying value of £4,000 – 800 = £3,200 in the balance sheet at the end of year one. However, in reality, the asset may not actually depreciate and may in fact appreciate in value, and be worth say £4,100 at the end of the year. The value of £4,100 is referred to as the market value of the asset.

Carrying value is sometimes referred to as book value or carrying amount.

For further information see the Wikipedia carrying value definition.

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Last modified December 16th, 2015 by Team

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