In accounting, appreciation of an asset

Asset

In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...

 is an increase in its value. In this sense it is the reverse of depreciation

Depreciation

Depreciation refers to two very different but related concepts:# the decrease in value of assets , and# the allocation of the cost of assets to periods in which the assets are used ....

, which measures the fall in value of assets over their normal life-time. Generally, the term is reserved for property

Property

Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...

 or, more specifically, land and buildings.

Applied to a currency

Currency

In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...

, appreciation is a rise of its value in a floating exchange rate

Floating exchange rate

A floating exchange rate or fluctuating exchange rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the foreign exchange market. A currency that uses a floating exchange rate is known as a floating currency....

.

In times of high inflation

Inflation

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

, appreciation of assets will be common to all balance sheet

Balance sheet

In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...

 assets. In any viable modern economy, such property tends to increase in value over the years – if only because of the scarcity

Scarcity

Scarcity is the fundamental economic problem of having humans who have unlimited wants and needs in a world of limited resources. It states that society has insufficient productive resources to fulfill all human wants and needs. Alternatively, scarcity implies that not all of society's goals can be...

 of usable land forces its price

Price

-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...

 in a competitive situation. However, this belief has often caused speculative bubbles

Economic bubble

An economic bubble is "trade in high volumes at prices that are considerably at variance with intrinsic values"...

 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 concept of value

Value (economics)

An economic value is the worth of a good or service as determined by the market.The economic value of a good or service has puzzled economists since the beginning of the discipline. First, economists tried to estimate the value of a good to an individual alone, and extend that definition to goods...

 itself, as well as the various instruments and methods used in the valuation process

Valuation (finance)

In finance, valuation is the process of estimating what something is worth. Items that are usually valued are a financial asset or liability. Valuations can be done on assets or on liabilities...

.

See also

• Depreciation
  Depreciation
  Depreciation refers to two very different but related concepts:# the decrease in value of assets , and# the allocation of the cost of assets to periods in which the assets are used ....
  
  
• Depreciation (currency)
  Depreciation (currency)
  Currency depreciation is the loss of value of a country's currency with respect to one or more foreign reference currencies, typically in a floating exchange rate system. It is most often used for the unofficial increase of the exchange rate due to market forces, though sometimes it appears...
  
  
• Revaluation
  Revaluation
  Revaluation means a rise of a price of goods or products. This term is specially used as revaluation of a currency, where it means a rise of currency to the relation with a foreign currency in a fixed exchange rate. In floating exchange rate correct term would be appreciation. The antonym of...
  
   (currency)
• Revaluation of fixed assets
  Revaluation of fixed assets
  In finance, a revaluation of fixed assets is a technique that may be required to accurately describe the true value of the capital goods a business owns...
  
  
• Requirements of IFRS
  Requirements of IFRS
  This article lists some of the important requirements of International Financial Reporting Standards.References to IFRS standards are given in the standard convention, for example refers to paragraph 10 of IAS1, Presentation of Financial Statements.....
  
  
• Generally Accepted Accounting Principles
  Generally Accepted Accounting Principles
  Generally Accepted Accounting Principles refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards...