A loss on impairment of an intangible asset is the difference between the asset’

Question

A loss on impairment of an intangible asset is the difference between the asset’s

a. carrying amount and the expected future net cash flows. b. carrying amount and its fair value. c. fair value and the expected future net cash flows. d. book value and its fair value.

Ans: b

Could you, please, explain what is exactly the difference between Book Value and Carrying amount? I know that "In most contexts, book value and carrying value describe the same accounting concepts". Then why it's different in this case?

Thank you!

Explanation / Answer

There is only a simple difference that the carrying amount is the amount based on the balance sheet of company. And book value is the original value of the asset as reduced by accumulated depreciation and amortization expense.

In general sense they are used in place of each other.

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