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On a balance sheet, to spread an expense over more than one accounting period. One of the most prominent examples of allocation is depreciation, which spreads the cost of an asset over a certain number of years.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


1. To spread systematically a single monetary amount over a number of time periods, usually years. For example, depreciation allocates the cost of a capital asset over its useful life.
2. To distribute cost or revenue throughout a number of operations or products. For example, a business must decide how to allocate the costs of running its headquarters over all its operations to determine the profitability of each of those operations.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
Allocating discounts to all inventory generally conforms to the best accounting practice in various trades or businesses.
Allocating a disproportionate amount of tolerable misstatement to financial statement elements such as inventory increases audit efficiency by reducing the audit resources needed to achieve the desired level of audit risk.
Although some CPA firms have developed a structured approach for allocating tolerable misstatement amounts to financial statement elements, other firms determine this allocation within broad guidelines.
These benefits provide a basis for allocating the cost savings of acting together.
* THERE IS SOME CONCERN charitable organizations are too liberal in allocating costs to program expenses instead of to administration or fund-raising.
Acquiring a specific intangible avoids the problem of allocating cost to a variety of assets after the fact.
Second, once the insured starts allocating GST exemption to a trust, he or she will want to continue to do so each year, to maintain the trust's fully exempt status.
Third, and most importantly, the trust can still achieve fully exempt status in the future, without the insured allocating GST exemption currently.
The partnership may specify in its agreement the partners' interests in partnership profits for purposes of allocating excess nonrecourse liabilities, provided the specified interests are reasonably consistent with allocations of some other significant item of partnership income or gain.
The final regulations apply the general residence rule for allocating recognized losses from portfolio stock and stock in RICs, but retain the S corporation exception.
In the August 1997 issue of The Tax Adviser ("Beware Not Allocating the GSTT Exemption on a Gift Tax Return--A Trap for the Unwary," pp.

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