Harness Money

What is accretion?

In finance and accounting, “accretion” typically refers to the gradual increase or growth of an asset or liability over time. It can have different meanings depending on the context:

1. Bond Accretion: In the context of bonds or debt instruments, accretion refers to the process by which the value of a bond increases over time to reach its face value (par value) at maturity. This occurs when a bond is issued at a discount, and the discount is amortized or accreted over the life of the bond until it reaches its par value.

2. Asset Accretion: Asset accretion refers to the growth or increase in the value of an asset over time. It can occur through various means, such as capital appreciation in investments, the accumulation of earnings or interest on an investment, or the accretion of value through mergers and acquisitions.

3. Liability Accretion: Liability accretion refers to the increase in the value or amount of a liability over time. It can occur, for example, when a liability is subject to interest or when it accrues additional obligations or costs over time.

In general, accretion represents the gradual growth or increase of an asset or liability, often due to the passage of time or the application of specific accounting principles.