Basis Value

  

Categories: Trading, Metrics, Accounting

Primarily used for accounting and tax purposes, the basis value (rather than the fair market value) of a fixed asset is the base price off which capitalized expenses are added and amortization of asset depreciation are calculated.

When disposing of or selling an asset, the basis value will largely dictate any capital gains taxes. As the basis value rises, the taxable capital gain falls, as does London Bridge, if early reports are to be trusted.

Related or Semi-related Video

Finance: What is Amortization?49 Views

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Finance a la shmoop what is amortization alright come on now people

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sing it with me when you repay your loan overtime on your own that's amortization [man singing serving food and dogs jump up]

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doesn't everyone know that song i was raised as a kid with that at bedtime

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all right well sorry about that every now and then Beyonce being Crosby has to [Beyonce on stage]

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you know let out her inner self here so yeah amortization big word let's make it

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smaller we've got the root word Mort in there which means death and yeah [Mort highlighted in yellow]

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basically when you're amortizing alone you're killing your obligation to pay it [a knife pulled on the loan]

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and softly, killing softly with his song and yes another way you're gradually reducing

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your obligation by paying back the loan you know whatever you borrowed your

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amortizing all right so once a loan is fully amortized the amount you owe is [loan bill due amount]

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zero like you paid it all back all right well that's one definition of the term

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amortization also refers to a fancy way of allocating costs like you pay a

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thousand dollars for an amazing bed mattress well did you get value from it [man paying $1000 for a bed and hands cash to woman]

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well if you use it a lot you'll amortize the cost in such a way that the bed on a

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per night basis is cheap how so well if you sleep on it for 2,000 nights before [calculation for value of bed]

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you toss it some dumpster somewhere you paid 50 cents per night for your bed got

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it fifty cents times two thousand that's a grand and that's like a nickel of hour of

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use if you're know sleeping 10 hours a day or using it ten hours a day and [man sleeping in vibrating bed]

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that assumes it's just you in the bed all right well what about a prom dress

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or a tux well the finest Walmart prom dress runs [girl holding a prom dress for $300]

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about 300 dollars but you wear it once before Tyler Hendricks vomits on it and [Tyler vomits on girls prom dress]

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well and you're done so it cost 300 bucks for one night or

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about fifty bucks an hour for the six hours you wore it before tossing it yeah

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way expensive per use because you only had six hours of amortization the dress [calculation for the value of prom dress]

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well loans work the same way you borrow 120 grand to buy a home with a 30-year

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mortgage over those 30 years you amortize the loan or allocate the paying [woman receiving a 30-year loan for a mortgage]

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down of that 120 k you just borrowed over a long period of time so you know

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something keep in mind the next time you go shopping for a bed or a dress [a couple shopping for a bed]

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