What is carrying value?

Carrying value is the value at which an asset or liability is recognized on a company's balance sheet. It is also known as book value or carrying amount. The carrying value of an asset is the original cost of the asset minus any accumulated depreciation, amortization, or impairment charges. For a liability, the carrying value is the original amount of the liability, adjusted for any changes such as repayments or changes in interest rates.

Carrying value is important for financial reporting purposes as it reflects the value of an asset or liability on the balance sheet at a particular point in time. It can be used to assess the financial health of a company, as well as to calculate various financial ratios and metrics.

It's worth noting that the carrying value of an asset or liability may not always reflect its true market value. In cases where the market value of an asset is significantly different from its carrying value, companies may need to consider impairments or write-downs to reflect the true economic value of the asset.