Appreciation

Business, Legal & Accounting Glossary

Definition: Appreciation


Quick Summary of Appreciation


Appreciation is a term used in accounting relating to the increase in the value of an asset. In this sense, it is the reverse of depreciation, which measures the fall in the value of assets over their normal life-time.

In times of high inflation, appreciation will be common to all balance sheet assets. Generally, the term is reserved for property or, more specifically, land and buildings. In any viable modern economy, such property tends to increase in value over the years – if only because of the scarcity of usable land forces its price in a competitive situation.

Needless to say, there are considerable difficulties in assessing the increase in the value of any particular asset. This is principally because of the variety of interpretations that can be attached to the word value itself and due to the various instruments and methods used in the valuation process.



What is the dictionary definition of Appreciation?

Dictionary Definition


Noun

  1. A just valuation or estimate of merit, worth, weight, etc.; recognition of excellence.
  2. Accurate perception; true estimation; as, an appreciation of the difficulties before us; an appreciation of colours.
    His foreboding showed his appreciation of Henry’s character. —J. R. Green.
  3. A rise in value;—opposed to depreciation.

An increase in value. Appreciated property is property that has gone up in value since it was acquired.


Full Definition of Appreciation


Appreciation is a term used in accounting relating to the increase in value of an asset. In this sense, it is the reverse of depreciation, which measures the fall in the value of assets over their normal life-time.

Appreciation is a rise of a currency in a floating exchange rate.

In times of high inflation, appreciation will be common to all balance sheet assets. Generally, the term is reserved for property or, more specifically, land and buildings. In any viable modern economy, such property tends to increase in value over the years – if only because of the scarcity of usable land forces its price in a competitive situation. However, this belief has often caused speculative bubbles to arise.

There are considerable difficulties in assessing the increase in value of any particular asset. This is principally because of the variety of interpretations that can be attached to the word value itself and due to the various instruments and methods used in the valuation process.

Appreciation is also a term meaning an expression of gratitude.


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Definition Sources


Definitions for Appreciation are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 26th April, 2020 | 3 Views.