1. What is Carrying Amount?

Carrying Amount (also known as Book Value) represents the net value of an asset on a company's balance sheet. It is calculated as the original cost of the asset minus any accumulated depreciation, amortization, or impairment costs.

2. How Does the Calculator Work?

The calculator uses the carrying amount formula:

Where:

• Original Cost — The initial purchase price of the asset
• Accumulated Depreciation — The total depreciation charged against the asset to date

Explanation: This calculation shows the remaining value of an asset after accounting for its usage and wear over time.

3. Importance of Carrying Amount Calculation

Details: Calculating carrying amount is essential for accurate financial reporting, tax calculations, asset valuation, and making informed decisions about asset replacement or disposal.

4. Using the Calculator

Tips: Enter the original cost and accumulated depreciation in currency format. Both values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between carrying amount and market value?
A: Carrying amount is based on historical cost minus depreciation, while market value is the current price the asset could be sold for in the market.

Q2: Can carrying amount be negative?
A: No, carrying amount should not be negative. If accumulated depreciation exceeds original cost, it may indicate an accounting error or impairment.

Q3: How often should carrying amount be calculated?
A: Carrying amount should be calculated at each reporting period (monthly, quarterly, or annually) for accurate financial statements.

Q4: Does carrying amount consider asset appreciation?
A: Generally, no. Under most accounting frameworks, assets are carried at cost less depreciation, not at market value.

Q5: When is an asset's carrying amount written down?
A: When there's evidence of impairment (permanent reduction in value), the carrying amount is written down to its recoverable amount.