What is recognition?
In the financial world, the valuation is the term used to describe the increase in the value of the asset value that occurs over time. Understanding the valuation may be important for accounting, as it can affect the numbers in the balance sheet of the company in addition to playing the tax calculation. The opposite of recognition is the depreciation in which the asset value decreases over time; Depreciation is also an important concept in accounting.
A wide range of assets can appreciate. In general, everything that is used as an investment is capable of recognition together with depreciation. This includes real estate, art, shares, bonds and similar assets. When the asset is appreciated, someone may decide to sell at a higher price than it has been paid, thereby achieving a profit from increasing the value.
The reasons why assets rise and decrease are quite variable. In general, reduced and increased demand for demand has increased. For example, someone who buys real estate in the areaThose who are expanding rapidly can often rely on recognition, because more and more people want to settle there and are willing to pay higher prices for the privilege. Things such as artwork appreciate their value as evaluation of their value; Other works of the same artist can be sold for high quantities, manage the value of work, and the death of the artist also tends to create an increase in value for their work, because people understand that the offer is limited.
things such as stocks and bonds will appreciate how the company's performance improves. Improvement in performance also increases the demand for stocks, and at the same time the supply decreases because people decide to stick to their supplies because the company is doing well. Market fluctuations can also affect the recognition or depreciation of assets such as foreign currency and securities.
Depreciation is commonly visible with Equipment. Things such as vehicles, computers and heavy machines are considered as assets because the company or person had to buy them and have value but their hOver time over time AS, it decreases. Depreciation of the device can be considered to be depreciated in certain tax situations, and the loss of the value of the asset is considered to be commercial costs. Conversely, people can be taxed when they appreciate their assets, such as when the property is re -evaluated by the tax evaluator and taxes to reflect the increase in its value.