Adjusted Cost Basis

Definition

  • To calculate the "Adjusted Cost Basis," take the amount paid for the item, plus the amount paid for improvements, and then subtract the losses and depreciation. The profit or loss is determined when the owner sells the item, and determines the difference between the sale price and the adjusted cost basis.

Synonyms
actual value, balance sheet, computation

Related Terms and Acronyms

  • Actual Cash Value (ACV) Acronym,
    • The replacement cost of an insured asset with depreciation accounted for.
    • The amount of money that a broker or dealer has invested in the purchase and repair of a used vehicle.
  • Appreciation Definition,
    • An increase in the value of a property or item.
  • Basis Definition,
    • Relating to cost basis, this is the amount assigned to an asset from which a taxpayer determines capital gain or loss. For assets purchased, the basis is the price paid. Special rules apply to assets acquired through gift or inheritance, as well as to the value of stock funds held for a period during which earnings are reinvested.
    • That on which a thing rests or is founded.
  • Gross Profit Margin Definition,
    • The difference between the sales your business generates and the costs you pay out for goods.
  • Income Approach Definition,
    • A step in the valuation process of an income property. The value is reached by estimating the annual income minus an allowance for vacancies and bad debts and then subtracting annual operating expenses, real estate taxes, and insurance premiums to obtain the net operating income. This is then converted by capitalization into a capital value.
  • Median Price Definition,
    • In a given area, the amount paid for a house in which half of the houses in that area sell for less and half sell for more.
  • Rate of Return (RR, ROR) Acronym, Important,
    • The profit an investment generates, expressed as equity divided by cash flow.
  • Return on Investment (ROI) Acronym, Very Important,
    • The profit an investment generates, expressed as equity divided by cash flow.
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