What is meant by the 'carrying value' of a bond?

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Master the UCF ACG2021 Principles of Financial Accounting Final Exam. Study with comprehensive practice tests, flashcards, and multiple choice questions, each with detailed explanations. Ace your exam!

The carrying value of a bond represents the net amount at which the bond is valued on the balance sheet over time. This value consists of the bond’s face value adjusted for any unamortized premium or discount. Therefore, the balance in the bonds payable account, which includes these adjustments, accurately defines the carrying value.

This concept is vital because it reflects the bond's actual accounting value, which will change over the life of the bond due to the amortization of any premium or discount. Understanding the carrying value is essential for analyzing a company’s liabilities and ensuring accurate financial reporting. The other options do not define carrying value accurately; they refer to distinct concepts related to bonds but do not capture the comprehensive nature of the carrying value as it appears on financial statements.