Glossary · Also called Net book value
Carrying amount
What a non-current asset is worth in the accounts after depreciation is taken off its cost.
What it means
The cost of an asset less its accumulated depreciation to date; the value at which it is shown in the statement of financial position.
Example
A machine costing RM8,000 with RM3,000 accumulated depreciation has a carrying amount of RM5,000.
Why it matters
It shows the not-yet-depreciated cost still to be charged in future periods.
In practice
The carrying amount does not have its own ledger account. It is a figure worked out for the statement of financial position, where non-current assets are shown at cost less the accumulated depreciation held in a separate account.
Suppose a delivery van cost RM40,000 and RM24,000 of depreciation has built up over three years. The carrying amount is RM16,000. This is the figure listed under non-current assets, not the RM40,000 cost. Each year the depreciation charge reduces it further.
Students often confuse carrying amount (also called net book value) with market value, the price the asset would fetch if sold. The two rarely agree. Depreciation spreads cost over the useful life using an accounting method, so a van with a RM16,000 carrying amount might sell for RM12,000 or RM19,000. When they differ, the sale produces a profit or loss on disposal.
If disposal of assets and profit or loss on sale is a weak spot, one of our teachers can walk you through it with exam-style figures. Book a trial class.
Related terms
Syllabus reference: Cambridge 0452 and 0985, syllabus for 2027 to 2029, sub-topic 4.2 Depreciation and disposal of non-current assets (page 14).
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
Need carrying amount explained properly?
Tell us your child’s year and board on WhatsApp and we will suggest a first lesson. One-to-one and online, from RM75/hr.
One-hour paid trial · Same-day reply