Carrying value is the cost of an asset minus accumulated depreciation.
Let’s say you have an asset worth $20,000 that will last five years. If you depreciated it evenly you would take $20,000, divide it by 5 and expense $4,000 each year. The first year the accumulated depreciation would be $4,000. $20,000 -$4000 = 16,000. You bought a $20,000 asset; you deducted $4,000 of it; you have $16,000 left to deduct. The carrying value of the asset would be $16,000. The next year you would depreciate another $4,000. Accumulated depreciation be $8,000. $20,000 – $8000 =$12,000. $12,000 is the carrying value, the cost at which the asset is carried on the balance sheet net of accumulated depreciation.
Sign Up to Learn More!
Join our mailing list today to get notified of new discount offers, course updates, Roger CPA Review news, and more!