The
amortization of the bond discount was recorded under the
effective-interest method. On July 2, 2018, several years before their
maturity, https://simple-accounting.org/net-carrying-amount-accountingtools/ Nixon retired the bonds at 102. What is the loss that Nixon
should record on the early retirement of the bonds on July 2, 2018?

When a company initially acquires an asset, its carrying value is the same as its original cost. To calculate the carrying value or book value of an asset at any point in time, you must subtract any accumulated depreciation, amortization, or impairment expenses from its original cost. For other assets, when the circumstances that caused the impairment loss are favourably resolved, the impairment loss is reversed immediately in profit or loss (or in comprehensive income if the asset is revalued under IAS 16 or IAS 38).

Summary of IFRS 5

These mainly related to sales commissions paid to employees and third-party retailers. Inventories increased by EUR 0.2 billion compared with December 31, 2020, primarily due to increased stockpiling of high-priced devices for planned marketing campaigns in the United States operating segment. Shareholders’ equity increased from EUR 72.6 billion as of December 31, 2020 to EUR 81.5 billion. Profit of EUR 6.1 billion and other comprehensive income of EUR 6.7 billion increased shareholders’ equity, as did the https://simple-accounting.org/ capital increase from share-based payment of EUR 0.5 billion. By contrast, shareholders’ equity was reduced in connection with dividend payments for the 2020 financial year to Deutsche Telekom AG shareholders in the amount of EUR 2.8 billion and to other shareholders of subsidiaries in the amount of EUR 0.3 billion. The carrying amount of shareholders’ equity also decreased by a net EUR 0.8 billion due to the acquisition of T‑Mobile US shares by way of a capital increase against contribution in kind.

Many people use the terms carrying value and book value in different industries. But what they don’t know is that both terms are ultimately the same thing and are interchangeable. The term carrying value refers to the value of the asset that is carried over to the end of its life, whereas the term book value refers to the purchase cost of the asset that is recorded in the company’s book or balance sheet less accumulated depreciation. Carrying amount, also known as carrying value, is the cost of an asset less accumulated depreciation. The carrying amount is usually not included on the balance sheet, as it must be calculated. However, the carrying amount is generally always lower than the current market value.

Cost of Buildings

Provisions for pensions and other employee benefits decreased by EUR 1.6 billion compared with December 31, 2020 to EUR 6.1 billion, mainly due to an increase in the share prices of plan assets and interest rate adjustments. All this resulted in an actuarial gain of EUR 1.4 billion from the remeasurement of defined benefit plans to be recognized directly in equity. According to the recoverability test, impairment occurs when the carrying value of an asset exceeds the projected future net cash flows from the asset.

net carrying amount

We hope you find the information in this article helpful in giving you some insight into IAS 36. If you would like to discuss any of the points raised, please speak to your usual Grant Thornton contact or your local member firm. IAS 36’s step by step impairment approach is explained and set out in full in our article ‘Insights into IAS 36 – Overview of the Standard’. However to give some context over how the next three articles fit into this approach, here is a reminder of steps 4 to 6 (the ‘How’ part of the process). Your company has bought new HP laptops for the employees at $1,200 per laptop. Our mission is to empower readers with the most factual and reliable financial information possible to help them make informed decisions for their individual needs.

Cost of Interest During Construction

As a result, Deutsche Telekom AG’s stake in T‑Mobile US increased by 3.6 percentage points to 46.8 %. As a result, the share of profit attributable to the owners of the parent increased, as did consequently earnings per share. Effects of changes in the composition of the Group – mainly due to the sale of Telekom Romania Communications in the Europe operating segment – of EUR 0.2 billion and transactions with owners of EUR 0.2 billion decreased the carrying amount. The increase was primarily driven by higher receivables under the Equipment Installment Plan and growth in customer numbers in the United States operating segment.

net carrying amount

The reclassification of assets to non-current assets and disposal groups held for sale reduced the carrying amounts by EUR 3.1 billion. These reclassifications mainly resulted from the agreed sale of T‑Mobile Netherlands and the agreed sale of the 50 % stake in GlasfaserPlus GmbH. In addition, disposals decreased the carrying amounts by EUR 1.7 billion. As a result of the transaction, 37.65 % of the shares in Cellnex NL with a carrying amount of EUR 0.4 billion were included in the Group Development operating segment in the consolidated financial statements using the equity method. Other assets increased by EUR 0.5 billion, in part in connection with an increase in advance payments for hardware and support services in the United States operating segment. Capitalized contract costs increased by EUR 0.4 billion due to higher levels of capitalized costs of obtaining contracts in postpaid customer business in the United States operating segment.

If a company purchases a patent or some other intellectual property item, then the formula for carrying value is (original cost – amortization expense). Non-current assets and disposal groups held for sale increased by EUR 3.7 billion compared with December 31, 2020 to EUR 4.9 billion. By contrast, the sale of the Dutch company T‑Mobile Infra as of June 1, 2021 and of Telekom Romania Communications as of September 30, 2021 had decreasing effects on the carrying amount of EUR 0.4 billion and EUR 0.6 billion respectively. However, market interest rates and other factors influence whether the bond is sold for more (at a premium) or less (at a discount) than its face value.

What is the net book value or carrying value of an asset is?

What is Net Book Value of Assets? Net book value, also known as net asset value, is the value at which a company reports an asset on its balance sheet. It is calculated as the original cost of an asset less accumulated depreciation, accumulated amortization, accumulated depletion or accumulated impairment.

As a result, the equipment’s book value would be $7,000 ($10,000 – $3,000). A credit balance arises from the $3,000 in accumulated depreciation because it lowers the equipment’s book value. The whole amount of depreciation expense that has been incurred thus far for the asset is kept in an account called accumulated depreciation. In other words, it represents a running sum of all depreciation costs that have been tallied over time. The value of any fixed asset depreciates over time, and hence the cost incurred is not the same as the year it was purchased.

It is important for financial reporting and analysis because it accurately reflects the importance of long-term investments and helps to spread the asset’s cost over its useful life. The core principle in IAS 36 is that an asset must not be carried in the financial statements at more than the highest amount to be recovered through its use or sale. If the carrying amount exceeds the recoverable amount, the asset is described as impaired. The entity must reduce the carrying amount of the asset to its recoverable amount, and recognise an impairment loss.

With the DDB method, the depreciation is faster than that of straight-line but will not make the depreciation value bigger. It just means that depreciation is bigger in the early years but smaller in the later years. Given the same tractor, its fair value will depend on the supply and demand in the market.