The carrying amount of an asset refers to the value at which it is reported on the company's balance sheet. This value is calculated as the original cost of the asset, minus any accumulated depreciation, accumulated amortization, or accumulated impairment losses related to the asset.

For instance, if a company purchases office equipment for $10,000 and has accumulated depreciation of $2,000 over two years, the carrying amount of the equipment would be $8,000. Regular assessment of an asset's carrying amount is essential for accurate financial reporting and for adhering to accounting standards such as generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS).

A related term is 'book value,' which is often used interchangeably with carrying amount. Understanding the carrying amount is crucial during the process of asset reconciliation, especially during month-end or year-end closings, as it ensures that the reported values on the balance sheet accurately reflect the company’s financial state. It is a key metric for financial analysis and asset management.