Adjusted cost base (ACB),
Definition of Adjusted cost base (ACB):
An adjusted cost base (ACB) is an income tax term that refers to the change in an asset's book value resulting from improvements, new purchases, sales, payouts, or other factors. An adjusted cost base can be calculated on a single or a per-unit basis and represents the actual cost to a buyer or seller.
Investment: A tax filing calculation whereby the costs of making the investment are subtracted from the gain or loss resulting from the sale of the investment. This claim is included in capital gains reporting.
Business: A tax filing calculation whereby additional costs and gains in the book value of an asset are reported. Typically, an ACB will include improvements or modifications to the asset and subsequent output increases or decreases, as a result of any changes. This asset claim is included in capital gains reporting.
The book value can be adjusted because of a change or improvement made to the asset, such as upgrades to real estate. For example, if a company purchases an office building, then invests more money towards expanding and updating the building, the combined costs are factored together to find the adjusted cost base.
How to use Adjusted cost base (ACB) in a sentence?
- Adjusted cost basis (ACB) modifies the cost basis of an asset to account for fees, commissions, or other charges associated with the transaction.
- ACB can also modify the tax basis based on material changes or capital improvements made to the asset that affects its value.
- ACB is used primarily for tax purposes in reporting capital gains or losses, or depreciation.
Meaning of Adjusted cost base (ACB) & Adjusted cost base (ACB) Definition