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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
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50% - Moderately

Adjusted Cost Basis


Synonyms:actual value, balance sheet, computation
Filed Under: financial-banking, insurance
Tags: banking, insurance
 

Definition of adjusted cost basis

adjusted cost basis
1. 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.

Related Terms and Acronyms:

  • actual cash value (ACV)   The replacement cost of an insured asset with depreciation accounted for.
  • appreciation   An increase in the value of a property or item.
  • basis   That on which a thing rests or is founded.
  • gross profit margin   The difference between the sales your business generates and the costs you pay out for goods.
  • income approach   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   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 (ROR, RR)   The profit an investment generates, expressed as equity divided by cash flow.
  • return on investment (ROI)   The profit an investment generates, expressed as equity divided by cash flow.

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