What is accretion of interest?

What is accretion of interest?

Accreted Interest means interest accrued on a Loan Asset that is added to the principal amount of such Loan Asset instead of being paid as interest as it accrues.

What is the difference between accretion and amortization?

Amortization, when used to calculate the yield at any given time of a fixed-income investment bought at a premium, is the writing off of the investment’s premium over its projected life until maturity. Accretion is the accumulation of paper value on a discounted fixed-income investment until it reaches maturity.

What does accretion mean in finance?

Key Takeaways. Accretion refers to the gradual and incremental growth of assets. In finance, accretion is also the accumulation of additional income an investor expects to receive after purchasing a bond at a discount and holding until maturity.

What is the difference between accretion and growth?

As nouns the difference between accretion and growth is that accretion is the act of increasing by natural growth; especially the increase of organic bodies by the internal accession of parts; organic growth while growth is an increase in size, number, value, or strength.

What does it mean to be accretive?

–The term “accretive” is an adjective that refers to business deals that result in gradual or incremental growth in value for a company.

What is the opposite of amortized?

Accretion can be thought of as the antonym of amortization: see here also, Accreting swap vs Amortising swap. In a corporate finance context, accretion is essentially the actual value created after a particular transaction.

What is the opposite of accretive?

[Important: The antonym to “accretive” is “dilutive”, which describes any deal which causes a corporation’s earnings per share value to drop.]

What is accretive and dilutive?

Dilutive Mergers: An Overview. A merger and acquisition (M&A) deal is said to be accretive if the acquiring firm’s earnings per share (EPS) increase after the deal goes through. If the resulting deal causes the acquiring firm’s EPS to decline, the deal is considered to be dilutive.

What is planetesimal accretion quizlet?

formed when planetesimals joined together through collisions and gravity to form larger bodies.

Why are expenses amortized?

Amortization is typically expensed on a straight-line basis. That means that the same amount is expensed in each period over the asset’s useful life. Assets that are expensed using the amortization method typically don’t have any resale or salvage value. (The term “amortization” is used in another, unrelated, context.

What is the difference between intangible and tangible?

Tangible assets are physical; they include cash, inventory, vehicles, equipment, buildings and investments. Intangible assets do not exist in physical form and include things like accounts receivable, pre-paid expenses, and patents and goodwill.

What accretive means?

What is Accretive? In both finance and in general lexicon, the term “accretive” is the adjective form of the word “accretion”, which refers to gradual or incremental growth. For example, an acquisition deal may be deemed accretive for the absorbing company, if that deal contributes to an increase in earnings per share.

What is forgone interest on cash?

Foregone Interest on Cash is the interest income on the Balance Sheet Cash that the company will no longer earn because it’s using the cash to pay for the acquisition.

How does the planetesimal theory of planet formation explain the asteroids?

Some of these planetesimals go on to become planets and moons. Since the gas giants are balls of gas with liquid cores, it may seem impossible that an asteroid-like object formed them. The planetesimals formed the core of these gaseous planets, which turned molten when it enough heat was created.

What features of our solar system provide clues to how it formed?

The orbits, spins and motions in the Solar System also provide clues to its formation. As we saw when discussing the night sky, the Solar System has a lot of regularity to it. Most of the planets (and Sun) orbit and spin in the same direction (counterclockwise as viewed from above the Ecliptic).

Can liability be amortized?

For a liability, the amortization takes place over the time period that the item is repaid or earned. Amortization is essentially a means to allocate categories of assets and liabilities to their pertinent time period.

What is the difference between amortization and depreciation?

Amortization is the practice of spreading an intangible asset’s cost over that asset’s useful life. Depreciation is the expensing of a fixed asset over its useful life.

What are the differences between tangible and intangible resources Why is it important for decision makers to understand these differences?

Tangible resources are observed and quantified. Intangible resources are rooted deeply in firm’s history, accumulate over time, are difficult for competitors to analyze and imitate. Intangible resources often plays a more significant role than tangible resources: more valuable because you can leverage them more.

What is foregone interest?

Foregone interest means the difference between the amount of interest you received on a loan you extended and the amount you could have received had you charged the going rate. That rate is usually based on the applicable federal interest rate or “AFR.”