Carrying amount
What an asset or liability is recorded at in the accounts today, after depreciation, amortisation or any write-down. Frequently not what it would fetch.
Where you will meet it
Carrying amount appears in 3 learning outcomes on the CFA syllabus. A few of them:
- Explain how goodwill is accounted for and disclosed
“Under IFRS a single-step test compares the unit's carrying amount with its recoverable amount (the higher of fair value less costs of disposal and value in use); the loss is charged first to goodwill and any excess is spread pro rata over the unit's other assets.”
- Explain the revaluation model and how assets are derecognised
“On disposal, the asset and its accumulated depreciation are removed and the difference between proceeds and carrying amount is a gain or loss in income.”
- Explain how bonds payable are accounted for
“If the coupon is below the market rate the bond is issued at a discount and the carrying amount rises toward par over the life; above it, at a premium, and the carrying amount falls.”
Practise it
Practise carrying amount until it is automatic: questions that explain every wrong option.
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