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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.