Carrying value is the original cost of an asset, less the accumulated amount of any depreciation or amortization, less the accumulated amount of any asset impairments. The concept is only used to denote the remaining amount of an asset recorded in a company's accounting records - it has nothing to do with the underlying market value (if any) of an asset. Market value is based on supply and demand and perceived value, and so could vary substantially from the carrying value of an asset. For instance, a building may have been purchased many years ago and has since appreciated in value, while the owner has been depreciating it for a number of years; the result is a wide disparity between the carrying value and market value of the building.
Also, a business that engages in excellent equipment maintenance practices may find that the market values of its assets are significantly higher than those of a company that does not invest a sufficient amount in asset maintenance. The result can be a wide divergence between carrying value and market value for the same assets owned by different entities.
The carrying value of an entire business may be divided by the number of shares outstanding to arrive at carrying value per share. This amount is sometimes considered to be the baseline value per share, below which the market price of a share should not drop. However, since there is not necessarily any connection between market value and carrying value, the baseline assertion can be difficult to justify.
For example, a company may subject a fixed asset to an accelerated rate of depreciation, which rapidly reduces its carrying value. However, the market value of the asset is much higher, since market participants believe that the asset carries value better over the long term than would be reflected by the use of an accelerated depreciation method.
As an example of the calculation of carrying value, ABC International purchases a widget stamper for $50,000, and has recorded accumulated depreciation against it of $20,000. It has also recorded accumulated impairment charges of $12,000 against the stamper. Thus, the carrying value of the widget stamper is $18,000, which is calculated as:
$50,000 Purchase price - $20,000 Depreciation - $12,000 Impairment
= $18,000 Carrying value
From the perspective of an entire business, you can consider carrying value to be the net recorded amount of all assets, less the net recorded amount of all liabilities. A more restrictive view that results in a lower carrying value is to also remove the recorded net amount of all intangible assets and goodwill from the calculation.
Carrying value is the same as book value or carrying amount.