Carrying amount là gì

     
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 asset 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 khổng lồ both financial modeling and accounting, minus the accumulated depreciation of the asset. It is also called book value & is not necessarily the same as an asset’s fair valueFair ValueFair value refers to lớn the actual value of an asset - a product, stock, or security - that is agreed upon by both the seller and the buyer. Fair value is applicable khổng lồ a sản phẩm that is sold or traded in the market where it belongs or under normal conditions - và not to lớn one that is being liquidated. Or market value.Bạn đã xem: Carrying amount là gì


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Carrying Amount vs. Market Value

Carrying amount and 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 and is expected lớn still be of use for đôi mươi years, at which time the salvage value is expected to be $20,000. The annual depreciation is therefore $3,000 ($80,000-20,000)/20 years. At the kết thúc of the 20 years, the tractors carrying amount is $20,000.

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Example of Fair Value

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

Carrying Value vs. Book Value

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

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How lớn Calculate for Carrying Amount

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

Take the original cost of purchasing the asset less salvage value.Divide that number by the number of years the asset is expected lớn be of use to generate the annual depreciation amount & 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: