CARRYING AMOUNT LÀ GÌ

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The value of an asset as reflected in a company’s book or balance sheet, minus its depreciation value

What is the Carrying Amount?

The carrying amount is the original cost of an asmix as reflected in a company’s books or balance sheetBalance SheetThe balance sheet is one of the three fundamental financial statements. These statements are key to both financial modeling và accounting, minus the accumulated depreciation of the asset. It is also called book value and is not necessarily the same as an asset’s fair valueFair ValueFair value refers lớn the actual value of an asmix - a sản phẩm, stochồng, or security - that is agreed upon by both the seller and the buyer. Fair value is applicable to lớn a hàng hóa that is sold or traded in the market where it belongs or under normal conditions - and not to lớn one that is being liquidated. or market value.Bạn sẽ xem: Carrying amount là gì


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Carrying Amount vs. Market Value

Carrying amount và market value differ in many ways, as listed below:

Example of Carrying Amount

Let’s say a company owns a tractor worth $80,000 lớn be used for developing its newest land property. The said tractor’s annual depreciation is $3,000 & is expected khổng lồ still be of use for trăng tròn years, at which time the salvage value is expected lớn be $đôi mươi,000. The annual depreciation is therefore $3,000 ($80,000-trăng tròn,000)/trăng tròn years. At the end of the đôi mươi years, the tractors carrying amount is $trăng tròn,000.

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Example of Fair Value

Given the same tractor, its fair value will depend on the supply & demand in the market. If, at the time it was sold in the market, the demvà for tractors is high, it can be priced higher than its carrying value. The opposite can also be true if the demvà goes down. The price of the tractor can go up or down, depending on how much buyers are willing khổng lồ give sầu for it.

Carrying Value vs. Book Value

Many people use the terms carrying value và book value in different industries. But what they don’t know is that both terms are ultimately the same thing and are interchangeable. The term carrying value refers lớn the value of the asphối that is carried over lớn the over of its life, whereas the term book value refers to the purchase cost of the asmix that is recorded in the company’s book or balance sheet less accumulated depreciation.

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How to lớn Calculate for Carrying Amount

It is a very simple task lớn calculate for carrying amount, as shown in the example above. But lớn make it clearer, let’s explain it below:

Take the original cost of purchasing the asphối less salvage value.Divide that number by the number of years the asset is expected lớn be of use lớn generate the annual depreciation amount và record annually.Calculate the accumulated depreciation (number of years past * annual depreciation)Subtract the accumulated depreciation from the original purchase price to get the carrying amount.

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Depreciation in the Carrying Amount

The other method is the double-declining balance depreciation methodDouble Declining Balance DepreciationThe double declining balance depreciation method is a khung of accelerated depreciation that doubles the regular depreciation approach. It is, otherwise known as the 200% declining balance method. With the DDB method, the depreciation is faster than that of straight-line but will not make the depreciation value bigger. It just means that depreciation is bigger in the early years but smaller in the later years.

Related Readings

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certification program, designed lớn help anyone become a world-class financial analyst. To keep advancing your career, the additional CFI resources below will be useful: