Chapter 17 - Learning Objectives & Key Terms Flashcards
Appreciation
Monetary gain resulting from the increase in the market value of an investment, excluding additions of capital. For example, a house which is sold five years after it was purchased for 20% more than the purchase price
Asset
Something of value.
Basis
An owner’s original cost of a property.
Capital Gain (Loss)
At resale of a capital item, the amount by which the net sale proceeds exceed (or fall short) of the adjusted cost basis (book value). Used for income tax computations. Gains are called short or long based upon the length of the holding period after acquisition. Usually taxed at lower rates than ordinary income
Cash Flow
The resulting amount when annual debt service, tax liability, and capital improvement costs are subtracted from net operating income.
Equity
The remaining interest or value after all liens and other charges on the property have been paid.
Going Concern Value
The value of a business property that has been established for some time compared with the value and assets of a concern whose business is not yet established.
Goodwill
An intangible asset attributable to the reputation of a business.
Leverage
The use of borrowed capital (mortgage) to increase the potential return of an investment.
Liquidation Analysis
The determination of liabilities and distribution of assets in order to cover the indebtedness of a business which is to be sold.
Liquidity
The ability to sell an asset and convert it into cash at a price close to its actual value.
Personal Property
Any property which is not real property.
Risk
The difference between expectations and realizations or a measure of the uncertainty surrounding a current or future event.
Tax Shelter
A legal method of reducing tax liabilities.
