We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is Carrying Value?

Malcolm Tatum
By
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Also known as book value, carrying value is the worth of an asset that is reflected in the accounting records of a business, notably on the company’s balance sheet. The value is normally based on the original price of the asset, after allowing for any amount of amortization, allowed depreciation, or any type of impairment that may be applicable. In addition to using the term to refer to the worth of specific assets as listed on the balance sheet, the term is also used to refer to the net worth of a company.

Carrying value is very different from market value. Market value has to do with the current price that the asset would bring on the open market. In contrast, carrying value is based on the original purchase price, allowing for any factors that may have decreased the value. This means there is likely to be a significant difference in the market value and the carrying value. For example, if a business purchased a parcel of real estate fifty years ago, and no factors have occurred to depreciate the land, the carrying value will be the original purchase price. At the same time, the market value of the real estate is likely to be much higher, owing to factors that drove up the demand for land in that area.

In some cases, the carrying value involves more than just the purchase price. For example, the purchase of a building and the surrounding property may involve paying the sale price for the assets, along with closing costs, fees paid to the realtor, paying off back taxes on the property, or any other expense incurred in the acquisition of the asset. Any and all expenses that are necessary to allow the investor to assume ownership of the asset can rightly be included in the calculation of the carrying value.

When the idea is to determine the overall carrying value of a business, it is necessary to identify all the assets currently in the possession of the company, basing the worth of those assets on current book values. From this figure, any liabilities such as outstanding debt or the value of long-term bonds issued by the company, are deducted. Depending on the accounting method that prevails in the area where the company is located, the value of intangible assets may also be subtracted from the value of the total assets. Calculating carrying value of this type is often used as a means of setting a sale price for the business, although some attention is also paid to the current market value of all assets, after subtracting any existing liabilities.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.