appreciation

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Appreciation

Increase in the value of an asset.

Appreciation

An increase in value of a property or other asset. Most property depreciates, and it is fairly rare to discuss a property's appreciation. Real estate and securities are major exceptions, since real estate tends to appreciate over time and securities may increase or decrease in value depending on market conditions. Appreciation may be used to calculate capital gains or property taxes. See also: Capital appreciation.

appreciation

1. An increase in value, as of an asset.
2. Used to distinguish between securities that are likely to provide profits because of increases in price and those that provide dividend payments.

Appreciation.

When an asset such as stock, real estate, or personal property increases in value without any improvements or modification having been made to it, that's called appreciation.

Some personal assets, such as fine art or antiques, may appreciate over time, while others -- such as electronic equipment -- usually lose value, or depreciate.

Certain investments also have the potential to appreciate. A number of factors can cause an asset to appreciate, among them inflation, uniqueness, or increased demand.

appreciation

or

capital appreciation

  1. an increase in the price of an ASSET. Assets held for long periods, such as factory buildings, offices or houses, are most likely to appreciate in value because of the effects of INFLATION and increasing site values, though the value of short-term assets like STOCKS can also appreciate. Where assets appreciate their REPLACEMENT COST will exceed their HISTORIC COST and such assets may need to be revalued periodically to keep their book values in line with their market values.

    See DEPRECIATION, definition 1, INFLATION ACCOUNTING, REVALUATION PROVISION.

  2. an increase in the EXCHANGE RATE of a currency against other currencies under a FLOATING EXCHANGE RATE SYSTEM, reflecting an increase in market demand for that currency combined with a decrease in market demand for other countries’ currencies. The effect of an appreciation is to make imports (in the local currency) cheaper, thereby increasing import demand, and EXPORTS (in the local currency) more expensive, thereby reducing export demand, ultimately working towards keeping a country's BALANCE OF PAYMENTS in equilibrium on a more or less continuous basis.

    Appreciations, like REVALUATIONS, can adversely affect the profitability and market position of domestic firms by making imports more price competitive in the home market and, similarly, reducing their price competitiveness in export markets. See REVALUATION, definition 2, for further discussion. Contrast with DEPRECIATION, definition 2, EXCHANGE RATE EXPOSURE.

appreciation

  1. 1 an increase in the value of a CURRENCY against other currencies under a FLOATING EXCHANGE-RATE SYSTEM. An appreciation of a currency's value makes IMPORTS (in the local currency) cheaper and EXPORTS (in the local currency) more expensive, thereby encouraging additional imports and curbing exports, so assisting in the removal of a BALANCE OF PAYMENTS surplus and the excessive accumulation of INTERNATIONAL RESERVES.

    How successful an appreciation is in removing a payments surplus depends on the reactions of export and import volumes to the change in relative prices; that is, the PRICE ELASTICITY OF DEMAND for exports and imports. If these values are low, i.e. demand is inelastic, trade volume will not change very much and the appreciation may in fact make the surplus larger. On the other hand, if export and import demand is elastic then the change in trade volumes will operate to remove the surplus. BALANCE-OF-PAYMENTS EQUILIBRIUM will be restored if the sum of export and import elasticities is greater than unity (the MARSHALL-LERNER CONDITION). See REVALUATION for further points. Compare DEPRECIATION 1. See INTERNAL-EXTERNAL BALANCE MODEL.

  2. an increase in the price of an ASSET and also called capital appreciation. Assets held for long periods, such as factory buildings, offices or houses, are most likely to appreciate in value because of the effects of INFLATION and increasing site values, though the value of short-term assets like STOCKS can also appreciate. Where assets appreciate, then their REPLACEMENT COST will exceed their HISTORIC COST, and such assets may need to be revalued periodically to keep their book values in line with their market values.

    See DEPRECIATION 2, INFLATION ACCOUNTING.

appreciation

The process of increasing in value. As a practical matter, although the IRS allows taxpayers to depreciate real property improvements as if they were becoming less valuable over time and will eventually be worthless, real property generally appreciates over time with proper maintenance and repair.

References in classic literature ?
I was now of an age to appreciate a quiet life, and I had run risks enough.
And it is at such moments, if ever, that the users of a telephone can appreciate its insurance value.
and I don't want a man who can't appreciate what I'm worth.
There was no little cunning in this proposal, which indeed emanated not from any Isosceles -- for no being so degraded would have had angularity enough to appreciate, much less to devise, such a model of state-craft -- but from an Irregular Circle who, instead of being destroyed in his childhood, was reserved by a foolish indulgence to bring desolation on his country and destruction on myriads of his followers.
One needs to see the drawings of these ap- pearances in order to appreciate fully their remarkable resemblance in character.
You already know two of them, and you appeared to appreciate them like a judge.
MY BELOVED MAKAR ALEXIEVITCH,--I am unspeakably rejoiced at your good fortune, and fully appreciate the kindness of your superior.
Placed by popular confidence at the head of that movement, I can appreciate better than any other its significance and its probable results.
I will give you, then, explanations that I have given to no other, and you will appreciate what a distinction I make between you and the persons who have hitherto been sent to me.
I was not yet sufficiently instructed to appreciate Trollope, and I did not read him at all.
We do well to worship God in His works; and I know none of them in which so many of His attributes--so much of His own spirit shines, as in this His faithful servant; whom to know and not to appreciate, were obtuse insensibility in me, who have so little else to occupy my heart.
But she doesn't appreciate Gilbert at his full value, that's what.