In the context of real, personal, or intangible assets, appreciated property refers to assets that have a fair market value greater than their original cost, adjusted tax basis, or book value.
An 'arm's length' transaction in accounting refers to a deal made by unrelated parties, each acting in their own best interest to ensure fair market value is upheld. Understanding and ensuring such transactions are vital for transparent financial statements.
The purchase of assets or other goods for substantially less than the fair market value. A bargain purchase can be made when the vendor is in liquidation or is otherwise financially distressed.
Blockage discount refers to a reduction from the fair market value of a decedent's block of inventory for the purpose of determining the valuation of an estate.
Capital gain distributions refer to payments made by mutual funds or corporations to their investors, representing the gains earned from the sale of securities or liquidated assets. This distribution retains its character as capital gains when passed on to investors.
The estate tax is a levy on the total value of a decedent's estate, including all real, tangible, and intangible property, minus any liabilities. This tax is levied by the government based on the estate's fair market value at the time of death. The amount due may be reduced by applying available credits and exemptions. Comprehensive knowledge of federal and state tax laws is necessary for accurate calculation and assessment.
Fair Market Value (FMV) refers to the price at which an asset or service would change hands between a willing buyer and a willing seller, both having adequate information about the asset or service and under no compulsion to buy or sell.
Fair value, often referred to as fair market value, is the estimated amount for which an asset or liability could be exchanged in an arm's length transaction between informed, willing parties. It plays an essential role in acquisition accounting, and is significant in accounting for derivatives and other complex financial instruments.
Impairment is an accounting principle that outlines the process of reducing the book value of an asset when its fair market value drops below the asset's carrying amount on the balance sheet. It is a critical concept in financial reporting that ensures that the value of assets is not overstated in an organization's balance sheet.
Just compensation refers to full indemnity for the loss or damage sustained by the owner of property taken under the power of eminent domain. The measure generally used is the fair market value of the property at the time of taking.
Justified price refers to the fair market price that an informed buyer is willing to pay for an asset, whether it be in the form of stocks, bonds, commodities, or real estate.
A lease with an option to purchase allows the lessee (tenant) the right to buy the property at a predetermined price, under specific conditions. Its treatment may vary depending on whether it closely resembles a financing arrangement.
A lump-sum purchase involves the acquisition of two or more assets for one consolidated price, with the acquisition cost allocated to each asset based on their relative fair market values.
Ordinary income property refers to property whose sale at fair market value on the date of the contribution would have resulted in ordinary income or in short-term capital gain. It includes inventory, works of art or manuscripts created by the donor, and capital assets held one year or less.
The stepped-up basis is a method to adjust the valuation of property inherited from a decedent to its fair market value as of the date of the decedent's death.
Unrealized appreciation refers to the increase in the value of an asset that has not yet been sold, calculated as the excess of the asset's fair market value over its adjusted basis. This appreciation is recognized for financial reporting purposes but does not incur income tax until the asset is sold.
Unrealized depreciation refers to the excess of the adjusted basis of an asset over its fair market value, for determining losses on the sale or other disposition of the asset.
Value represents the worth of all the rights arising from ownership, commonly referring to the quantity of one thing that will be exchanged for another.
