Carrying Amount

Intermediate

The carrying amount is the value at which an asset or liability is recorded on the balance sheet. For a long-term asset, it is usually the original cost minus accumulated depreciation and any impairment.

The carrying amount is the figure you see in the accounts for a particular item at a particular date. It is not necessarily what the item could be sold for.

For example, a delivery van bought for 40,000 that has been depreciated by 24,000 over three years has a carrying amount of 16,000. If the van were damaged and written down by a further 3,000, its carrying amount would fall to 13,000.

Liabilities have carrying amounts too. A loan's carrying amount is generally the amount still owed, adjusted for certain fees or discounts.

The carrying amount matters in several situations. When an asset is sold, the difference between the sale price and the carrying amount is recorded as a gain or loss. When accounting standards require an impairment test, the carrying amount is compared with the asset's recoverable amount to see whether a write-down is needed.

The term is close in meaning to "net book value" for individual assets. It is used throughout international accounting standards.

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