Carrying Value

The value of some asset a company is carrying on its books. The notion drives from the common divergence of book value versus market value of various assets that are held for long periods of time. Example: A company bought an office building in 1973 in Silicon Valley (Think: Hewlett Packard). The building then cost $3.2M. Today it carries a market value of $87 million...but HP is carrying that value on their books as something like $5M. They followed the law and increased the value by the rate of inflation. But the rate of growth in the value of real estate increased over that period at something closer to 12 percent. Hence the divergence.