Appreciation - Tips
Appreciation is a term used in
accounting relating to the increase in value of an asset. In this sense it is
the reverse of depreciation, which measures the fall in value of assets over
their normal life-time.
Appreciation is a rise of a currency in a floating exchange rate.
In times of high inflation, appreciation will be common to all balance
sheet assets. Generally, the term is reserved for property or, more
specifically, land and buildings. In any viable modern economy, such property
tends to increase in value over the years - if only because of the scarcity of
usable land forces its price in a competitive situation. However, this belief
has often caused speculative bubbles to arise.
There are considerable difficulties in assessing the increase in value of
any particular asset. This is principally because of the variety of
interpretations that can be attached to the word value itself and due to the
various instruments and methods used in the valuation process.
Appreciation is also a term meaning an expression of gratitude.