Accelerated Cost Recovery Schedule (ACRS): That portion of the Internal Revenue Code (IRC) that sets forth tax depreciation deductions.
Accrued Depreciation: The total value loss from all causes, including value loss from physical deterioration, functional obsolescence, and economic (external) obsolescence.
Accumulated Depreciation (Book Depreciation): An accounting term that represents the total depreciation taken against the cost of an asset as of a given time.
Acquisition Date: The effective purchase date of an asset.
Ad Valorem Tax: A property tax levied upon real and/or personal property in proportion to value.
Adjusted Sale Price: The figure produced when the transaction price of a comparable sale is adjusted for elements of comparison.
Advocacy: Representing the cause or interest of another, even if that cause or interest does not necessarily coincide with one's own beliefs, opinions, conclusions or recommendations.
Age: The period that reflects the elapsed time from the date of installation to the date of observation of an asset.
Age/Life Analysis: An arithmetic process used to calculate a property's Remaining Useful Life.
Amortization: A write-off of the initial cost of an intangible asset over its life.
Annuity: An amount payable yearly or at regular intervals.
Anticipation: The perception that value is created by the expectation of benefits to be derived in the future.
Appraisal Consulting: The act or process of developing an analysis, recommendation or opinion to solve a problem where an opinion of value is component of the analysis leading to the assignment results.
Appraisal Date: See Valuation Date.
Appraisal Method: See Valuation Method.
Appraisal Practice: Valuation services performed by an individual acting as an appraiser, including but not limited to appraisal, appraisal review or appraisal consulting.
Appraisal Procedure: See Valuation Procedure.
Appraisal Report: A report, either written or oral conveying the findings of an appraisal assignment. The report must communicate each analysis, opinion and conclusion in a manner that is not misleading and contain sufficient information to enable the intended users of the appraisal to understand the report properly and clearly and accurately disclose all assumptions, extraordinary assumptions, hypothetical conditions and limiting conditions used in the assignment and must be prepared as a Self-Contained Appraisal Report, Summary Appraisal Report or Restricted Use Appraisal Report.
Appraisal Review: The act or process of developing and communicating an opinion about the quality of another appraiser's work that was performed as part of an appraisal, appraisal review or appraisal consulting assignment.
Appraiser: One who is expected to perform valuation services competently and in a manner that is independent, impartial and objective.
Appraiser's Peers: Other appraisers who have experience and competency in the same or similar type of assignment.
Appreciation: An amount representing the increase in value resulting from changes in market conditions or demand for a property over time.
Arbitrage Pricing Theory: A multivariate model for estimating the cost of equity capital, which incorporates several systematic risk factors.
Arm's Length Transaction: A transaction between unrelated parties under no duress.
Assemblage: The combining of two or more parcels, usually but not necessarily contiguous, into one ownership or use.
ASC 840 (Formerly SFAS 13): ASC 840, Leases; sets the formal financial accounting standards on accounting for leases.
As-is, Where-is: A term reflecting the purchase of an item in its present condition and location. Any costs associated with dismantling and removal are not considered.
Assets: Property of all kinds, both tangible and intangible.
Assignment: A valuation service provided as a consequence of an agreement between an appraiser and a client.
Assignment Results: An appraiser's opinions and conclusions developed specific to an assignment.
Assumed Earnings: A term used to signify that the assets being appraised are assumed to be capable of generating an income sufficiency to justify their appraised value.
Assumption: That which is taken to be true.
Assumptions and Limiting Conditions: A listing of specific assumptions and limiting conditions that are applicable to an appraisal.
Average-Cost Method: An inventory costing method under which each item of goods sold and of inventory is assigned a cost equal to the average cost of all goods purchased.
Balance: The principle that real property value is created and sustained when contrasting, opposing or interacting elements are in a state of equilibrium.
Balance Sheet: A statement of the financial position of a company that discloses, as of a specific time, the book value of its assets, liabilities and ownership equities.
Band of Investment: Weighted average cost of equity and debt. See Weighted Average Cost of Capital.
Bargain Renewal Option: A provision in a lease that allows the lessee, at their option, to renew the lease for a rental rate sufficiently lower than the fair rental rate for the property at the time the option becomes exercisable so that the exercise of the option appears, at the inspection of the lease, to be reasonably sound.
Base Term: The basic term of the lease used by the lessor in computing payout and relied upon by the lessee as the minimum time period during which the lessee will have the use and custody of the equipment.
Base Year: The first year to be considered in any set of data.
Beginning Inventory: Merchandise on hand for sale to customers at the beginning of the accounting period.
Beta: A measure of systematic risk of a stock; the tendency of a stock's price to correlate with ages in a specific index.
Betterment: A making or becoming better, an improvement that adds to the value of a property or facility.
Bias: A preference or inclination that precludes an appraiser's impartiality, independence or objectivity in an assignment.
Binding Requirement: All or part of Standards Rule of USPAP from which departure is not permitted.
Blockage Discount: An amount or percentage deducted from the current market price of a publicly traded stock to reflect the decrease in the per share value of a block of stock that is of a size that could not be sold in a reasonable period of time given normal trading volume.
Business: See Business Enterprise.
Business Enterprise: A commercial, industrial, service, or investment entity pursuing an economic activity; generally, a profit-making enterprise. A business enterprise may be unincorporated (sole proprietorships, partnerships) or incorporated (closely held or publicly held), or take the form of trust arrangements or multiple entities. The ownership interest in a business may be undivided, divided among shareholders, and/or involve a majority interest and minority interest. Businesses may be valued by an asset-based approach, the income capitalization approach, or the sales comparison approach. See Going Concern.
Business Risk: The degree of uncertainty of realizing expected future returns of the business resulting from factors other than financial leverage. See Financial Risk.
Business Valuation: The act or process of determining the value of a business enterprise or ownership interest therein.
Capacity Costing: The method engineers use to estimate breakeven analyses based on units of production.
Capital Asset: Any asset that has been capitalized on the company books.
Capital Asset Pricing Model (CAPM): A model in which the cost of capital for any stock or portfolio of stocks equals a risk-free rate plus a risk premium that is proportionate to the systematic risk of the stock or portfolio.
Capital Lease: Under ASC 840 (Formerly SFAS 13), a lease meeting any of the following criteria: a) the lease transfers ownership to the lessee at the end of the lease term; b) the lease contains an option to purchase property at a bargain price; c) the lease term is equal to 75% or more of the estimated economic life of the property (there are exceptions for used property leased toward the end of its useful life); or d) the present value of minimum lease rental payments is equal to 90% or more of the fair market value of the leased property less related Investment Tax Credit (ITC) retained by the lessor.
Capital Recovery: The return to investors of that portion of their property investment expected to be lost over the income projection period.
Capital Recovery Period: The period over which invested sums are returned to the investor.
Capital Recovery Rate: The return of invested capital expressed as an annual rate; often applied in a physical sense to wasting assets with a finite economic life.
Capital Structure: The composition of the invested capital of a business enterprise, the mix of debt and equity financing.
Capitalization: A procedure in which value is calculated by dividing an anticipated income stream, in constant dollars, by a capitalization rate.
Capitalization Factor: Any multiple or divisor used to convert anticipated economic benefits of a single period into value.
Capitalization of Earnings Method: A method within the income approach whereby economic benefits for a representative single period are converted to value through division by a capitalization rate.
Capitalization Rate: Any divisor (usually expressed as a percentage) used to convert anticipated economic benefits of a single period into value
Cash Equivalency Analysis: The procedure in which the sale prices of comparable properties sold with atypical financing are adjusted to reflect market terms.
Cash Flow: Cash that is generated over a period of time by an asset, group of assets or business enterprise. It may be used in a general sense to encompass various levels of specifically defined cash flows. When the term is used, it should be supplemented by a qualifier (for example, "discretionary" or "operating") and a specific definition in the given valuation context.
Cash Flow Statement: A financial statement that shows a company's sources and uses of cash during an accounting period.
Ceiling: In lower of cost or market computations, market (replacement cost) cannot be higher than the ceiling (net realizable value). Net realizable value is selling price less selling costs and costs to complete.
Central Processing Unit (CPU): One of the three basic components of a computer system, the others being memory and peripherals. The CPU processes all information handled by the computer.
Certification of Appraiser: A document required in all USPAP-conforming appraisal reports, signed by the appraiser, whose signature certifies as to the accuracy of information, objectivity of the appraiser, compliance with uniform standards, inspection of the property and acknowledgement of those contributing to the preparation of the appraisal.
Chronological Age: The number of years that have elapsed since an item or property was originally built or placed in service for the first time.
Class: A term used to identify types or groupings of property such as machinery, office furniture, rolling stock, etc.
Coinsurance: An arrangement under which the insured, in return for a reduced premium, agrees to share in the loss in the proportion that the insurance carried bears to a specified percentage of the property issued.
Coinsurance Clause: A provision in insurance policies that requires property to be insured at a specified percentage of its full value in exchange for a rate credit. If at the time of a loss it is determined that the insured carried inadequate limits, the loss recovery will be a percentage of the total loss amount, calculated by dividing the actual insured amount by the requirement date.
Commencement Date: The first day of the basic lease term.
Common Size Statements: Financial statements in which each line is expressed as a percentage of the total. On the balance sheet, each line item is shown as a percentage of total assets, and on the income statement, each item is expressed as a percentage of sales.
Comparables: A shortened term for similar property sales, rentals or operating expenses used for comparison in the valuation process.
Comparative Sales Method: The estimation of cost from known costs of similar property measured in units of size or capacity and adjusted for condition, time, location and other differences.
Comparative-Unit Method: A method used to derive a cost estimate in terms of dollars per unit of area or volume based on known costs of similar structures that are adjusted for time and physical differences.
Competition: The active demand for real estate by two or more market participants.
Complete Appraisal: The act or process of developing an opinion of value or an opinion of value developed without invoking the Departure Rule. One of two terms used in USPAP to designate the type of appraisal service; the other being a limited appraisal.
Compound Interest: Interest computed on the sum of an original principal and accrued interest.
Compounding: When doing income analysis, the process of determining future value is referred to as compounding.
Computer: An electronic tool used for rapid collection, organization and communication of large amounts of information.
Condemnation: The actual process of the taking of private property for public purposed by a public body through the lawful use of its power of eminent domain.
Conditional Sales Agreement (Lease): A transaction for purchase of an asset in which the user, for federal income tax purposes, is treated as the owner of the equipment at the outset and throughout the term of the transaction. Also called a conditional sale lease or a lease intended as security.
Confidential Information: Information that is either a) identified by the client as confidential when providing it to an appraiser and that is not available from any other source or b) classified as confidential or private by applicable law or regulation.
Consideration: The recorded price for which title to a property is transferred.
Consignments: A marketing method in which the consignor ships goods to the consignee, who acts as an agent for the consignor in selling the goods. The inventory remains the property of the consignor until sold by the consignee.
Constant Dollar Accounting: A method of accounting using an index to account for inflation-induced fluctuation in the value of the dollar; the method provides a historical view of the economic viability of an individual, enterprise or government.
Contract Rent: The actual income specified in a lease.
Control: The power to direct the management and policies of a business enterprise.
Control Premium: An amount or a percentage by which the pro rata value of a controlling interest exceeds the pro rata value of a non-controlling interest in a business enterprise, to reflect the power of control.
Conventional Loan: A mortgage that is neither insured nor guaranteed by an agency of the federal government, although it may be privately insured.
Correlation: The process of evaluating conclusions developed from the three recognized approaches to value in an effort to arrive at a final conclusion of value. (Cost Approach, Sales Comparison (or Market) Approach and Income Approach.)
Cost: Total dollar expenditure for any asset. This includes labor, materials, legal services, architectural design, financing, taxes during construction, interest, contractor's overhead and profit and entrepreneurial overhead and profit. The cost of a particular asset may be higher than, lower than or equal to the asset's value.
Cost/Benefit Ratio: The relationship between the benefits generated by an investment and the cost of that investment.
Cost Center: Any organizational segment or area of activity for which costs are accumulated.
Cost Index: A multiplier used to translate a known historical cost into a current cost estimate.
Cost of Capital: The expected rate of return that the market requires in order to attract funds to a particular investment.
Cost to Cure: The cost to restore an item of deferred maintenance to new or reasonably new condition.
Costing: Process of developing original or historical costs of assets for accounting purposes.
Curable Depreciation: A form of deterioration or depreciation that is economically feasible to remedy because the resulting increases in utility and value are equal to, or greater than, the expenditure.
Curable Functional Obsolescence: An element of accrued depreciation; a curable defect caused by a flaw in the structure, materials or design.
Curable Physical Deterioration: An element of accrued depreciation; a curable defect caused by deferred maintenance.
Current Assets: Cash and other assets that are reasonably expected to be realized in cash, or sold or consumed during the normal operating cycle of the business.
Current Liabilities: Obligations that mature within one year.
Database: A group of collections of logically related items of information. Each collection is referred to as a record. Examples include mailing lists and vendor lists.
Debt Coverage: The ability of a property to meet its debt service out of net operating income.
Debt/Equity Ratio: The ratio between an enterprise's loan capital and its equity capital.
Debt-Free: We discourage the use of this term. See Invested Capital.
Debt Service: The periodic payment that covers interest on, and retirement of, the outstanding principal of the mortgage loan.
Default: An event defined in a lease agreement as a default, such as failure to pay rent or perform some obligation required under the terms of lease.
Deferred Maintenance: Curable physical deterioration that should be corrected immediately although work has not commenced.
Deflation: A decrease in the general price level.
Depreciable Cost: Historical or original cost of a property, less the estimated salvage value that can be obtained for the property at the end of its useful life.
Depreciation: 1) The actual loss in value or worth of a property from all causes, including those resulting from physical deterioration, functional obsolescence and economic obsolescence or 2) a mathematical procedure for recovering the original cost of an asset in consistent installments over a specified period.
Depreciation Method-Declining Balance: An accounting method under which an annual depreciation provision is computed at a fixed percentage and applied to the unrecovered cost at the beginning of the period. The unrecovered cost is reduced each year by the prior year's depreciation. It is an accounting method that assumes that depreciation is dependent on the passage of time and allocates an equal amount of depreciation.
Depreciation Method-Straight Line: An accounting method by which a charge is calculated by dividing the cost, less salvage, by the number of fiscal periods of useful life.
Depreciation Method-Sum of the Years Digits: An accounting method that applies a changing rate to the cost less salvage, wherein the rate is a fraction, the denominator remains fixed and is equal to the sum of all the digits of the years of useful life, and the numerator decreases each year and is equal to the years of the remaining life at the beginning of the year.
Depreciation Rate: The rate or percentage used to calculate the depreciation charge.
Direct Capitalization Approach: This approach measures value by dividing a projected income stream, in constant dollars, by a capitalization rate.
Direct Cost: All costs directly incurred in the purchase and placement of an asset into functional use.
Direct Costing: A procedure whereby inventoried assets or groups of assets are matched to a historical cost record or schedule.
Direct (Variable) Costing: This method includes only variable manufacturing costs in the cost of ending finished goods inventory. This method is not acceptable for financial reporting purposes.
Direct Dollar Measurement: A method to estimate deterioration or obsolescence by considering the amount of money required to economically cure the deficiency.
Direct Lease: Under ASC 840 (Formerly SFAS 13), a nonleveraged lease by a lessor (not a manufacturer or dealer) in which the lease meets any of the criteria definitions of a capital lease plus two additional criteria as follows: a) Collection of minimum lease payments must be reasonably predictable; and b) No uncertainties surround the amount of non-reimbursable costs to be incurred by the lessor in a direct financing lease; also known as a direct financing lease.
Direct Materials: Raw materials that become an integral part of the finished product and are conveniently and economically traceable to specific units of productive output.
Discount for Lack of Control: An amount or percentage deducted from the pro rata share of value of 100% of an equity interest in a business to reflect the absence of some or all of the powers of control.
Discount for Lack of Voting Rights: An amount or percentage deducted from the per share value of a minority interest voting share to reflect the absence of voting rights.
Discount Rate: The percentage return that represents the total rate of return that an investor in a particular class of investment expects to achieve over the life of the investment; the return required to cause the investor to invest in the type of asset in question.
Discounted Cash Flow (DCF): A method of analysis in which the quantity, variability, timing, duration of periodic income and residual value are projected and discounted to a present value using a discount rate.
Discounted Future Earnings Method: A method within the income approach whereby the present value of future expected economic benefits is calculated using a discount rate.
Discounting: The process used to determine present value.
Disk Operating System (DOS): A specialized program that creates an environment in which other programs can operate.
Dollar-Value LIFO (Inventory): A variation of conventional LIFO in which layers of inventory are priced in dollars adjusted by price indices, instead of layers of inventory priced at unit prices.
Easement: An interest in real property that conveys use, but not ownership, of a portion of an owner's property.
Economic Age-Life Method: A method of estimating accrued depreciation in which the ratio between the effective age of a building and its total economic life is applied to the current cost of the improvements to obtain a lump-sum deduction.
Economic Benefits: Inflows such as revenues, net income, net cash flows, etc.
Economic Life: The period of time over which property may generate economic benefits.
Economic Obsolescence: A form of depreciation or loss in value or usefulness of a property caused by factors external to the property. These may include such things as the economics of the industry; availability of financing; loss of material and/or labor sources; passage of new legislation; changes in ordinances; increased cost of raw materials, labor, or utilities (without an offsetting increase in product price); reduced demand for the product; increased competition; inflation or high interest rates; or similar factors.
Economic Useful Life: The estimated period of time that a new property may be profitably used for the purpose for which it was intended. Stated another way, economic life is the estimated number of years that a new property can be used before it would pay the owner to replace it with the most economical replacement property that could perform an equivalent service. Functional or economic obsolescence factors may limit a property's economic life. An asset's economic life will often be less than its Normal Useful Life.
Effective Age (EA): The apparent age of a property in comparison with new property of like kind; the age indicated by the actual condition of the property. May be calculated by deducting the Remaining Useful Life of an asset from the Normal Useful Life.
Effective Date: See Valuation Date.
Effective Gross Income (EGI): The anticipated income from all operations of the real property after an allowance is made for vacancy and collection losses.
Effective Gross Income Multiplier (EGIM): The ratio between the sale price (or value) of a property and its effective gross income.
Effective Interest Rate (i): Interest per dollar per period; the nominal annual interest rate divided by the number of conversion periods per year.
Electronic Mail (E-mail): Text-based communication electronically transmitted by users of online services.
Eminent Domain: The power of a public body to acquire private property for public purposes. Usually includes some payment of just compensation to the property holder.
Ending Inventory: Merchandise on hand for sale to customers at the end of the accounting period.
Enterprise: See Business Enterprise.
Enterprise Resource Planning (ERP): Enterprise Resource Planning (ERP) systems attempt to integrate several data sources and processes of an organization into a unified system. A typical ERP system will use multiple components of computer software and hardware to achieve the integration. A key ingredient of most ERP systems is the use of a unified database to store data for the various system modules. The two key components of an ERP system are a common database and a modular software design. A common database is the system that allows every department of a company to store and retrieve information in real-time. Using a common database allows information to be more reliable, accessible, and easily shared. Furthermore, a modular software design is a variety of programs that can be added on an individual basis to improve the efficiency of the business. This improves the business by adding functionality, mixing and matching programs from different vendors, and allowing the company to choose which modules to implement. These modular software designs link into the common database, so that all of the information between the departments is accessible and real-time.
Equipment: All machinery and other apparatus or implements used in an operation or activity.
Equity: The owner's interest in property after the deduction of all liabilities.
Equity Capitalization Rate (RE): An income rate that reflects the relationship between a single year's pre-tax cash flow expectancy and the equity investment.
Equity-Debt Ratio: The ratio of the equity value or equity capital invested in a property to the amount of debt incurred on that property.
Equity Net Cash Flows: Those cash flows available to pay out to equity holders (in the form of dividends) after funding operations of the business enterprise, making necessary capital investments, and increasing or decreasing debt financing.
Equity Ratio (1-M): The ratio between the down payment paid on a property and its total price; the fraction of the investment that is unencumbered by debt.
Equity Risk Premium: A rate of return added to a risk-free rate to reflect the additional risk of equity instruments over risk free instruments (a component of the cost of equity capital or equity discount rate).
Equity Yield: The dollar return on equity from all sources.
Equity Yield Rate (YE): A rate of return on equity capital.
Escalation Clause: A clause in an agreement that provides for the adjustment of a price or rent based on some event or index.
Estate: Ownership rights and interests in property.
Estimate: An opinion of value.
Estimated Remaining Life: The period over which an item or groups of items are estimated to remain usable.
Excess Capacity: The capital machinery equipment that provides for greater production than demanded.
Excess Capital Cost: A type of functional obsolescence that typically results from changes in production or construction methods, equipment use, etc.
Excess Earnings: That amount of anticipated economic benefits that exceeds an appropriate rate of return on the value of a selected asset base (often net tangible assets) used to generate those anticipated economic benefits.
Excess Earnings Method: A specific way of determining a value indication of a business, business ownership interest, or security determined as the sum of a) the value of the assets derived by capitalizing excess earnings and b) the value of the selected asset base; frequently used to value intangible assets. See Excess Earnings.
Excess Land: The land not needed to accommodate the site's highest and best use.
Excess Rent: The amount by which contract rent exceeds market rent at the time of the appraisal, created by a lease favorable to the landlord.
Exclusion: A provision in an insurance contract describing property or types of property that are excluded from coverage.
Expense Ratio: The ratio of total expenses excluding debt service to either potential or effective gross income.
Externalities: The principle that economies outside a property have a positive effect on its value while diseconomies outside a property have a negative effect upon its value.
External Obsolescence: An element of accrued depreciation; a defect, usually incurable, caused by negative influences outside a site and generally incurable on the part of the owner, landlord, or tenant.
Extraordinary Assumption: An assumption directly related to a specific assignment, which, if found to be false, could alter the appraiser's opinions or conclusions.
Fairness Opinion: An opinion as to whether or not the consideration in a transaction is fair from a financial point of view.
FASB: Financial Accounting Standards Board.
Feasibility Analysis: A study of the cost-benefit relationship of an economic endeavor.
Fee Simple Estate: Absolute ownership unencumbered by any other interest or estate; subject only to the limitations of eminent domain, escheat, police power and taxation.
Financial Lease: A type of equipment lease originally authorized by TEFRA (Tax Equity and Fiscal Responsibility Act), commencing January 1, 1984, but postponed effective March 7, 1984, until January 1, 1988, by the Deficit Reduction Act of 1984. A finance lease is similar to a true lease except that a finance lease may contain a purchase option equal to 10% or more of the original cost of the equipment and/or the leased equipment may be limited use property. Finance leases are limited to new property.
Financing Agreement: An agreement among the owner trustee, the lenders, the equity participants and the lessee that spells out the obligations of the parties under a leveraged lease. See Participation Agreement.
Financial Risk: The degree of uncertainty of realizing expected future returns of the business resulting from financial leverage. See Business Risk.
Finished Goods: An inventory account unique to the manufacturing or production area to which the costs assigned to all completed products are transferred. The balance at period-end represents all manufacturing costs assigned to goods completed but not sold as of that date. Also defined as the completed but unsold products produced by a manufacturer.
FIRREA: Financial Institutions Reform, Recovery and Enforcement Act of 1989.
First-in, First-out Method (FIFO): An accounting inventory costing method under which the costs of the first items purchased are assigned to the first items sold and the costs of the last items purchased are assigned to the items remaining in inventory.
Fixed Assets: Permanent property, usually consisting of land, buildings, and machinery and equipment permanently employed in the rendering of a service or the production of a product. See Capital Asset.
Fixed Expenses: Operating expenses that generally do not vary with occupancy and which prudent management will pay whether the property is occupied or vacant.
Fixture: Personal property permanently attached to real estate that has become part of the real estate.
Floodplain: The flat surfaces along the courses of rivers, streams and other bodies of water that are subject to overflow and flooding.
Floor: In lower of cost or market computations, market is limited to net realizable value less a normal profit, called the floor. Market (replacement cost) cannot be below the floor.
Free Cash Flow: We discourage the use of this term. See Net Cash Flows.
Full Absorption (Full Costing): In accordance with GAAP, this method includes all manufacturing costs (fixed and variable) in the cost of finished goods inventory.
Functional Obsolescence: A form of depreciation in which the loss in value or usefulness of a property is caused by inefficiencies or inadequacies of the property itself, when compared to a more efficient or less costly replacement property that new technology has developed. Symptoms suggesting the presence of functional obsolescence are excess operating cost, excess construction (excess capital cost), over-capacity, inadequacy, lack of utility, or similar conditions.
Functional Utility: The ability of a property or building to be useful and to perform the function for which it is intended according to market tastes and standards; the efficiency of a building's use in terms of architectural style, design and layout, traffic patterns and the size and type of rooms.
Future Value (FV): The amount that an investment will be worth at a future date.
Generally Accepted Accounting Principles (GAAP): The conventions, rules, and procedures necessary to define accepted accounting practice at a particular time.
Going Concern: An ongoing operating business enterprise; the assumption that unless there is evidence to the contrary, the business will continue to operate for an indefinite period of time.
Goods In Transit: Goods that are in the process of being shipped from seller to buyer and that re en route at period end.
Goodwill: That intangible asset arising as a result of a name, reputation, customer loyalty, location, products and similar factors not separately identified.
Grantee: A person to whom property is transferred by deed or to whom property rights are granted by a trust instrument or other document.
Grantor: A person who transfers property by deed or grants property rights through a trust instrument or other document.
Gross Book: The amount shown in the assets section of a financial balance sheet as the capitalized cost of property.
Gross Building Area (GBA): The total floor area of a building, including below-grade space but excluding unenclosed areas, measured from the exterior of the walls.
Gross Income Multiplier: The ratio between sale price or value and potential or effective annual gross income.
Gross Leasable Area (GLA): The total floor area designed for the occupancy and exclusive use of tenants.
Gross Lease: A lease in which the landlord receives stipulated rent and is obligated to pay all or most of the property's operating expenses and real estate taxes.
Gross Profit: The result of subtracting cost of sales from net sales; also referred to as gross margin.
Gross Profit Method: A method used to estimate the amount of ending inventory based on the cost of goods available for sale, sales, and the gross profit percentage.
Gross Rent Multiplier (GRM): The relationship or ratio between the sale price or value of a property and its gross rental income.
Guideline Public Company Method: A method within the market approach whereby market multiples are derived from market prices of stocks of companies that are engaged in the same or similar lines of business, and that are actively traded on a free and open market.
Hardware: A term often synonymous with Equipment. Used lately as all the equipment needed for the operation of a computer system.
Highest and Best Use: The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility and maximum profitability.
Historical Cost: The cost of a property when it was first placed into service by its first owner.
Holding Period: The term of ownership of an investment.
Hypothetical Condition: That which is contrary to what exists but is supposed for the purpose of analysis.
Income Statement: A financial statement that shows the amount of income earned by a business over an accounting period.
Incurable Depreciation: A form of deterioration or depreciation that is not economically feasible to remedy because the resulting increases in utility and value are less than the expenditure.
Incurable Functional Obsolescence: An element of accrued depreciation; a defect caused by a deficiency or superadequacy in the structure, materials or design, which cannot be practically or economically corrected.
Incurable Physical Deterioration: An element of accrued depreciation; a defect caused by physical deterioration that cannot be practically or economically corrected.
Indexing: A method used to estimate current costs whereby a factor is applied to the historical cost of an item. (See Trending.)
Indirect Costs: Those expenditures that are normally required to purchase and install a property, but which are not usually included in the vendor's invoice. Examples of indirect costs can include engineering, architectural, and professional fees, administrative, accounting, and legal fees, financing costs, insurance, security, and training, but excludes all abnormal costs.
Inflation: An economic condition, the signs of which include rising prices and reduced purchasing power.
Initial Term: The initial period of time for which equipment is leased exclusive of renewals.
Insurance Cost New (ICN): The replacement or reproduction cost new as defined in the insurance policy less the cost new of the items specifically excluded in the policy, as of a specific date.
Insurance Rate: The percentage relationship between the insurance premium and the coverage it buys.
Intangible Assets: Non-physical assets such as franchises, trademarks, patents, copyrights, goodwill, equities, mineral rights, securities and contracts (as distinguished from physical assets) that grant rights and privileges, and have value for the owner.
Intended Use: The use or uses of an appraiser's reported appraisal, appraisal review, or appraisal consulting assignment opinions and conclusions as identified by the appraiser based on communication with the client at the time of the assignment.
Intended User: The client or any other party as identified, by name or type, as users of the appraisal, appraisal review, or appraisal consulting report by the appraiser on the basis of communication with the client at the time of the assignment (USPAP page 3).
Interest: The cost associated with the use of money for a specific period of time.
Interim Use: The temporary use to which a site or improved property is put until it is ready to be put to its future highest and best use.
Internal Rate of Return (IRR): The annualized rate of return on capital that is generated or can be generated by an investment over a period of ownership. It is equivalent to the discount rate that makes the net present value of an investment equal to zero.
Internal Revenue Service (IRS): A federal agency that interprets and enforces the US tax laws governing the assessment and collection of revenue for operating the government.
Internet: A global network of computer networks that provides access to information and data files provided by universities, libraries, governmental and legislative bodies, corporations, associations, and individuals.
Inventory: A term used to identify the compilation of fixed asset data or information created during an appraisal; . also defined as those items of tangible property that are held for sale in the normal course of business, are in the process of being produced for such purpose or are to be used in the production of such items.
Inventory Cost: Cost recorded upon purchase of inventory; includes invoice price less cash discounts plus freight and transportation and applicable insurance, taxes and tariffs.
Inventory Layer: Under the LIFO method, an increase in inventory quantity during a period.
Inventory Turnover: Number of times per year that an individual item in inventory would be sold based on historical demand. It is the ratio of quantity sold per year to the number of units on hand. Inventory turnover is considered to be a good indicator of the expected level of demand for the inventory during a liquidation.
Invested Capital: The sum of equity and debt in a business enterprise. Debt is typically a) all interest bearing debt or b) long-term interest-bearing debt. When the term is used, it should be supplemented by a specific definition in the given valuation context.
Invested Capital Net Cash Flows: Those cash flows available to pay out to equity holders (in the form of dividends) and debt investors (in the form of principal and interest) after funding operations of the business enterprise and making necessary capital investments.
Investment Risk: The degree of uncertainty as to the realization of expected returns.
Investment Tax Credit (ITC): A credit against taxes due equal to 10% for equipment with a recovery period of five years or more, and 6% for equipment with a recovery period of three years. The amounts are reduced 2% on election by the taxpayer in lieu of the otherwise required tax basis reduction. Note: Appealed in 1986.
Iowa Curves: A series of 22 statistical survivor curves developed by Iowa State University that predict the percentage of assets within a given group that will retire at various points during the life of the group. The curves are based on empirical data (mainly in the 1930s) by Iowa State University for the purpose of statistically predicting future service expectancy for various tangible properties. (Similar to human mortality curves used in the insurance industry).
Item-by-Item Method: A method of applying the lower-of-cost-or-market to inventory pricing.
Jurisdictional Exception: An assignment condition that voids the force of a part or parts of USPAP when compliance with part or parts of USPAP is contrary to law or public policy applicable to the assignment.
Key Person Discount: An amount or percentage deducted from the value of an ownership interest to reflect the reduction in value resulting from the actual or potential loss of a key person in a business enterprise.
Land-to-Building-Ratio: The proportion of land area to gross building area.
Land Residual Technique: A capitalization technique in which the net operating income attributable to the land is isolated and capitalized to indicate the land's contribution to total property value.
Last-in, First-out Method (LIFO): An inventory costing method under which the costs of the last items purchased are assigned to the first items sold and the cost of the inventory is composed of the cost of items from the oldest purchase. Also defined as a cost flow assumption; the last goods purchased are assumed to be the first goods sold.
Lease: A conveyance of the right to use property by the owner (lessor) to another (lessee) for a specified period in return for a specified rent or other compensation.
Lease Intended as Security: A lease in which the lessee is considered owner for both legal and federal income tax purposes; a conditional sale or installment purchase for income tax purposes.
Lease Schedule: A listing of items subject to a lease that describes the items in detail. The schedule may reflect the lease term, the commencement date, and the location of the equipment and be incorporated in to the basic lease agreement by reference.
Lease Term: The fixed, non-cancelable term of a lease. Includes, for accounting purposes, all periods covered by fixed-rate renewal options for which economic reasons appear likely to be exercised at the inception of the lease. Includes, for tax purposes, all periods covered by fixed-rate renewal options.
Leasehold Estate: The interest held by the lessee (the tenant or renter) through a lease conveying the rights of use and occupancy for a stated term under certain conditions.
Lessee: The individual or company that is using, or has the right to use an asset for a specified period of time in accordance with the terms and conditions of the lease.
Lessor: The legal owner who pays for the asset and permits the lessee to use the asset in accordance with the lease contract.
Level of Trade: Level of trade entails the various levels at which goods are bought and sold. Personal property has several measurable marketplaces. Therefore, the approach must define and analyze the appropriate market consistent with the type and definition of value.
Leveraged Lease: A true lease or a finance lease that meets the definition criteria for a direct financing lease or a capital lease, plus all of the following characteristics: a) at least three parties are involved: a lessee, a lessor and a long-term lender; b) the financing provided by the lender is substantial to the transaction and without recourse to the lessor; and c) the lessor's net investment typically declines during the early years of the lease and rises during the later years of the lease.
Levered Beta: The beta reflecting a capital structure that includes debt.
LIFO Conformity Rule: A statutory requirement in the U.S. that dictates if the LIFO method is used for incoming tax purposes, it must also be used for financial reporting purposes.
LIFO Liquidation: Liquidation of the LIFO base or old inventory layers when inventory quantities decrease. This liquidation can distort income since old costs are being charged to cost of goods sold and matched against current revenues.
LIFO Reserve: The difference, at a specified rate, between inventory valued using LIFO and inventory valued using the method the company uses for internal management or reporting purposes.
LIFO Retail: An inventory costing method that combines the LIFO cost flow assumption and the retail inventory method.
Limited Appraisal: The act or process of developing an opinion of value or an opinion of value developed under and resulting from invoking the Departure Rule. One of two terms used in USPAP to designate the type of appraisal service; the other being a complete appraisal
Limited Use Property: Property that is uniquely valuable to the lessee and not valuable to anyone else except as scrap. A lease of special purpose property will not qualify as a true lease because the lessee controls the residual value.
Liquidation: The process of ending a business; entails selling assets, paying liabilities and distributing any remaining assets to the partners.
Liquidity: The ability to quickly convert property to cash or pay a liability.
Loan-to-Value Ratio (M): The ratio between a mortgage loan and the value of the property pledged as security, usually expressed as a percentage.
Lower-of-Cost-or-Market Rule: A method of inventory pricing under which the inventory is priced at cost or market, whichever is lower.
Machine Tool: Any device, usually stationary, composed of a number of moving parts, at least partially automatic in action, and operated by power, used for turning, planning, shaping, milling, drilling, grinding, assembling or otherwise performing useful work on material.
Machinery: A term encompassing man-made mechanical devices, usually powered, which are designated to create a product or in some manner alter the state of a material or partial product.
Machinery & Equipment (M&E): The physical facilities available for production, including the installation and service facilities appurtenant, together with all other equipment designed for or necessary to its manufacturing and industrial purposes, regardless or method of installation, including all those items of furniture and fixtures necessary for the administration and proper operation of the enterprise.
Majority Control: The degree of control provided by a majority position.
Majority Interest: An ownership position greater than 50% of the voting interest in a business enterprise.
Markdown: A decrease below original retail price. A markdown cancellation is an increase (not above original retail price) in retail price after a markdown.
Market Capitalization of Equity: The share price of a publicly traded stock multiplied by the number of shares outstanding.
Market Capitalization of Invested Capital: The market capitalization of equity plus the market value of the debt component of invested capital.
Market Multiple: The market value of a company's stock or invested capital divided by a company measure (such as economic benefits, number of customers).
Market Rent: The rent that a property would most probably command in the open market and indicated by the current rents paid and asked for comparable property as of a specific date.
Marketability: The ability to quickly convert property to cash at minimal cost.
Marketability Discount: An amount or percentage deducted from an equity interest to reflect the lack of marketability.
Marketing Average: An inventory costing method used in conjunction with a perpetual inventory system. A weighted-average cost per unit is recomputed after every purchase. Cost of goods sold are recorded at the most recent moving average cost.
Marketing Period: The time required to sell a property in the open market subject to specific sale conditions.
Markup: An increase above original retail price. A markup cancellation is a decrease (not below original retail price) in retail price after a markup.
Mass Appeal: The process of valuing a universe of properties as of a given date using standard methodology, employing common data and allowing for statistical testing.
Master Lease: A lease line of credit that allows a lessee to add equipment to a lease under the same basic terms and conditions without negotiating a new lease contract.
Material Requirements Planning (MRP): is a software based production planning and inventory control system used to manage manufacturing processes. Although it is not common nowadays, it is possible to conduct MRP by hand as well. An MRP system is intended to simultaneously meet three objectives: 1. Ensure materials and products are available for production and delivery to customers. 2. Maintain the lowest possible level of inventory. 3. Plan manufacturing activities, delivery schedules, and purchasing activities.
Merger and Acquisition Method: A method within the market approach whereby pricing multiples are derived from transactions of significant interests in companies engaged in the same or similar lines of business.
Mid-Year Discounting: A convention used in the Discounted Future Earnings Method that reflects economic benefits being generated at midyear, approximating the effect of economic benefits being generated evenly throughout the year.
Minority Discount: A discount for lack of control applicable to a minority interest.
Minority Interest: Ownership position with less than 50% of the voting interest in an enterprise.
Modified Accelerated Cost Recovery Schedule (MACRS): Accelerated depreciation schedule allowed by the federal government for income tax purposes.
Mortgage Coefficient (C): A multiplier in the Ellwood formula to compute a capitalization rate. The mortgage coefficient is a function of the terms of the mortgage loan, the projected ownership period, and the equity yield rate.
Mortgage Constant (RM): The capitalization rate for debt; the ratio of the annual debt service to the principal amount of the mortgage loan.
Multiple: The inverse of the capitalization rate.
Net Assets: Total assets less total liabilities.
Net Cash Flows: When the term is used, it should be supplemented by a qualifier. See Equity Net Cash Flows and Invested Capital Net Cash Flows.
Net Income: Revenue less all expenses. The balance remaining to the equity owners of a business after deducting from the gross revenue all operating expenses, depreciation, and tax deductions.
Net Lease: A lease in which the tenant pays all property operating expenses in addition to the stipulated rent.
Net Operating Income (NOI): The net income remaining after all operating expenses are deducted from the gross income, but before mortgage debt service and book depreciation are deducted.
Net Realized Value: Selling price less reasonably estimated costs of completion and disposal.
Nominal Interest Rate (I): A stated or contract rate; an interest rate, usually annual, that does not necessarily correspond to the true or effective rate of growth at compound interest.
Non-Operating Assets: Assets not necessary for continuing business operations; usually held for investment purposes or as surplus and intended for subsequent disposal. (NOTE: In Canada, the term used is "Redundant Assets".)
Normal Useful Life (NUL): The physical life, usually in terms of years, that a new property will actually be used before it is retired from service. A property's normal useful life relates to how long similar properties actually tend to be used, as opposed to the more theoretical economic life calculation of how long a property can profitably be used. See Economic Life.
Normalized Earnings: Economic benefits adjusted for nonrecurring, noneconomic, or other unusual items to eliminate anomalies and/or facilitate comparisons.
Normalized Financial Statements: Financial statements adjusted for nonoperating assets and liabilities and/or for nonrecurring, noneconomic or other unusual items to eliminate anomalies and/or facilitate comparisons.
Obsolescence: A loss in value due to a decrease in the usefulness of property caused by decay, changes in technology, changes in people's behavioral pattern and tastes or environmental changes.
Occupancy Rate: The relationship or ratio between the income received from the rented units in a property and the income that would be received if all the units were occupied.
Off Balance Sheet Loan: A type of financing that is used as a true lease for financial accounting purposes and a conditional sales agreement or loan for tax purposes.
Open-End Lease: A conditional sale lease in which the lessee guarantees the lessor will realize a minimum value from the sale of the asset at the end of the lease. If the equipment is not sold for the agreed residual value, the lessee pays the difference to the lessor. If the equipment is sold for more than the agreed residual value, the lessor pays the excess to the lessee. The lease is called an "open-end" lease because the lessee does not know the extent of the liability to the lessor until the equipment is sold at the end of the lease. The lessee's liability is "open-ended." The term is commonly used in automobile leasing. Individual liability under open-end leases is limited by consumer protection laws.
Operating Assets: Assets employed in the normal conduct of business operations.
Operating Expense Ratio (OER): The ratio of total operating expenses to effective gross income.
Operating Expenses: The periodic expenditures necessary to maintain the real property and continued production of the effective gross income, assuming prudent and competent management.
Operating Lease: Under ASC 840 (Formerly SFAS 13), a lease that does not meet the criteria of a capital lease or direct financing lease. Generally used to describe a short-term lease whereby a user can acquire use of an asset for a fraction of the useful life of the asset. The term is used for a lease in which the lessor provides services, such as maintenance, insurance, and payment of personal property taxes. The term "operating lease" is derived from short-term lease equipment, such as leases for trucks and construction equipment.
Operating Obsolescence: A form of functional obsolescence that is caused by excess operating or manufacturing expenses.
Operating Statement: A statement displaying financial operations over a specified period of time; most frequently an income statement.
Original Cost (OC): The initial cost of an asset in the hands of its present owner.
OSHA: Occupational Safety and Health Administration.
Overall Capitalization Rate (RO): An income rate for a total real property interest that reflects the relationship between a single year's net operating income expectancy or an annual average of several years' income expectancies and total property price or value; used to convert net operating income into an indication of overall property value.
Paired Data Analysis: A quantitative technique used to identify and measure adjustments to the sale prices or rents of comparable properties; to apply this technique, sales or rental data on nearly identical properties are analyzed to isolate a single characteristic's effect on value or rent.
Partial Loss: An insurance term used to describe a loss of less than the entire value of a property or amount indicated in an insurance contract.
Participation Agreement: An agreement among the owner trustee, the lenders, the equity participants and the lessee that spells out the obligations of the parties under a leveraged lease. Also called a financing statement.
Periodic Inventory Method: A method of accounting for inventory under which the cost of goods sold is determined by adding the net cost of purchases to beginning inventory and subtracting the ending inventory.
Periodic Inventory System: An inventory system where actual quantities are determined and recorded inventories adjusted as a result of a physical count taken at set intervals.
Peripherals: One of the three basic components of a computer system, the others being Central Processing Unit (CPU) and Random Access Memory (RAM). The term generally applies to any device other than the CPU and RAM that is attached to the computer system. Broken down into three basic categories: a) input/output (IO) devices such as printers, keyboards and monitors; b) mass storage devices such as disk drives, hard drives and tape drives; and c) communication and control devices such as modems and soundcards.
Perpetual Inventory Method: A method of accounting for inventory under which the sales and purchases of individual items of inventory are recorded continuously, therefore allowing cost of goods sold to be determined without taking a physical inventory.
Personal Property: Identifiable tangible objects that are considered by the general public as being "personal". For example, furnishings, artwork, antiques, gems and jewelry, collectibles and machinery and equipment; all tangible property that is not classified as real estate.
Physical Deterioration: A form of depreciation where the loss in value or usefulness of a property is due to the using up or expiration of its useful life caused by wear and tear, deterioration, exposure to various elements, physical stresses and similar factors.
Physical Inventory: The act of making a physical count of all merchandise on hand at the end of an accounting period.
Physical Life: The number of years a new property will physically endure before it deteriorates or fatigues to an unusable condition purely from physical causes, without considering functional and economic obsolescence.
Portfolio Discount: An amount or percentage deducted from the value of a business enterprise to reflect the fact that it owns dissimilar operations or assets that do not fit well together.
Potential Gross Income (PGI): The total income attributable to real property at full occupancy before vacancy and operating expenses are deducted.
Potential Gross Income Multiplier (PGIM): The ratio between the sale price of a property and its potential gross income.
PPSA: Refers to the Personal Property Security Act, a statute used in many provinces and territories regulating the taking and enforcement of security.
PPSR: Refers to a Canadian Government database that maintains public records showing security interests in personal property for lenders, sellers, repairers, taxing authorities, government agencies, purchasers and the general public.
Premise of Value: A statement identifying the assumptions under which the value is being determined.
Price: The amount a particular purchaser agrees to pay and a particular seller agrees to accept under the circumstances surrounding their transaction. Price may not necessarily be equal to value.
Price/Earnings Multiple: The price of a share of stock divided by its earnings per share.
Principle of Substitution: A theory whereby a prudent purchaser would pay no more for a property than the cost of acquiring an equally desirable substitute in the market.
Proof of Loss: An insurance term pertaining to a formal submission by an insured to an insurer containing sufficient data in support of a claim.
Property: The lawful right of ownership of future benefits from tangible and intangible assets. Any asset, including cash, title to which is ordinarily transferable between parties.
Public Utility Property: As defined in the Internal Revenue Code, public utility property includes property used predominantly in the trade or business of the furnishings or sale of: a) electrical energy, water or sewage disposal businesses; b) gas or steam through a local distribution system; c) telephone services or other communication services if furnished or sold by COMSAT; or d) transportation of gas or steam by pipeline, if the rates for the furnishing or sale of any of the above services have been established or approved by a state (or political subdivision), by an agency or instrumentality of the United States or by a public service or public utility commission.
Purchase Option: An option to purchase lease property at the end of the lease term. In order to protect the tax characteristics of a true lease, an option to purchase leased equipment from a lessor by a lessee that is granted at the beginning of a lease cannot be at a price less than its fair market value at the time the right is exercisable.
Purchase Order (PO): A document prepared by the accounting department authorizing a supplier to ship specified goods or provide specified services.
Quantity Survey Method: A procedure used to develop the total cost estimate for materials and labor by estimating the quantity and quality of all materials used and all categories of labor hours required; applying unit cost figures, then adding estimates of owner's overhead and contractor's overhead and profit; also known as detailed estimating.
Random Access Memory (RAM): One of the three basic components of a computer system, the others being CPU (see Central Processing Unit) and peripherals. RAM is a high-speed storage device used by a CPU to store and retrieve program instructions and data.
Rate of Return: The ratio developed when comparing income or yield to the original investment.
Ratio: The relation of one amount to another expressed as a fraction, integer or percentage.
Raw Materials: For a manufacturing firm, materials on hand awaiting entry into the production process.
Raw Materials Inventory: An inventory account made up of balances of raw material and supplies on hand at a particular time; also called stores or inventory control account.
Real Estate: Physical land and appurtenances attached to the land including buildings, structures, standing timber, orchards, etc.
Real Property: All interests, benefits and rights inherent in the ownership of physical real estate; the bundle of rights with which the ownership of the real estate is endowed. Also known as Realty.
Redundant Assets: see Non-Operating Assets.
Remaining Economic Life: Estimated period during which a property of a certain effective age is expected to continue to be profitably used for the purpose for which it was intended.
Remaining Physical Life: Estimated period during which a property of a certain effective age is expected to physically endure before it deteriorates or fatigues to an unusable condition purely from physical causes, without considering the possibility of earlier retirement due to functional or economic obsolescence.
Remaining Useful Life (RUL): The estimated period during which a property of a certain effective age is expected to actually be used before it is retired from service.
Renewal Option: An option to renew the lease at the end of the initial lease term. In order to protect the tax characteristics of a True Lease, an option to renew a lease of equipment from a lessor by a lessee that is granted at the beginning of a lease must be at a price equal to its fair rental value at the time the right is exercised. Other renewal option periods are counted as part of the lease term for guideline purposes.
Replacement Allowance: An allowance that provides for the periodic replacement of building components that wear out more rapidly than the building itself and must be replaced during the building's economic life.
Report: Any communication, written or oral, of an appraisal, appraisal review or appraisal consulting service that is transmitted to the client upon completion of an assignment.
Required Rate of Return: The minimum rate of return acceptable by investors before they will commit money to an investment at a given level of risk.
Residual Techniques: Procedures used to capitalize the income allocated to an investment component of unknown value after all investment components of known values have been satisfied.
Restricted Use Appraisal Report: A written or oral report prepared under Standards Rule 8-2, 8-2-c-i through xii and advisory opinion 11 that must contain the following: i) State the identity of the client by name type; ii) State the intended use of the appraisal; iii) State information sufficient to identify the personal property involved in the appraisal; iv) State the property interest being appraised; v) State the type of value and cite the source of the definition of value pertinent to its purpose; vi) State the effective date of the appraisal and the date of the report; vii) State the extent of the process of collecting, confirming, and reporting data or refer to an assignment agreement retained in the appraiser's workfile that describes the source of work to be performed; viii) Clearly and conspicuously state all extraordinary assumptions and hypothetical conditions; and state that their use might have affected the assignment results; ix) State the appraisal procedures followed, the value opinion(s) and conclusion(s) reached and reference the workfile; x) State the use of the property, existing as of the date of value and the use of the personal property reflected in the appraisal and, when reporting an opinion of market value, state the appraiser's opinion of the highest and best use of the personal property; xi) State and explain any permitted departures from specific requirements of Standard 1 or 7; state the exclusion of any of the usual appraisal approaches; and state a prominent use restriction that limits use of the report to the client and warns that the appraiser's opinions and conclusions set forth in the report cannot be understood property without additional information in the appraiser's workfile; xii) Include a signed certification in accordance with Standards Rule 2-3 or 8-3 (USPAP pages 68, 69, 70, 149, 150, and 151).
Retail Method: An inventory costing method that uses a cost ratio to reduce ending inventory (valued at retail) to cost.
Retrospective Appraisal: An appraisal with an effective date prior to the date on which the appraisal was performed.
Return on Equity: The amount, expressed as a percentage, earned on a company's common equity for a given period.
Return on Investment (ROI): A measure of profitability related to the amount earned by a business enterprise in relation to the owner's investment in the enterprise; net income divided by owner's equity. See Invested Capital and Return on Equity.
Revenue Ruling: A written opinion of the Internal Revenue Service requested by parties to a lease transaction, which is applicable to assumed facts stated in the opinion. Published IRS rulings have general applicability.
Reversion: A lump-sum benefit that an investor receives or expects to receive at the termination of an investment.
Reversion Factor: A compound interest factor used to discount a single future payment to its present worth, given the appropriate discount rate and discount period.
Risk: The possibility of loss of principal, lower future income purchasing power, interest rate variations during the term of the investment, and the failure to attain the periodic and the residual value forecast.
Risk Factor: The portion of a given return or rate of return from capital invested in an enterprise that is assumed to cover the risks associated with the particular investment; as distinguished from, an excess of, the rate of return obtained from funds invested where the safety of principal is virtually assured.
Risk-Free Rate: The rate of return available in the market on an investment free of default risk.
Risk Premium: In risk or security analyses the return over and above the risk-free rate.
Risk Rate: The annual rate of return on capital that is commensurate with the risk assumed by the investor: the rate of interest or yield necessary to attract capital.
Rule of Thumb: A mathematical formula developed from the relationship between price and certain variables based on experience, observation, hearsay or a combination of these; usually industry specific.
Sale-Leaseback: A transaction that involves the sale of equipment by the owner and a lease of the same equipment back to the original owner who continues to use the equipment.
Sandwich Lease: A lease in which an intermediate or sandwich leaseholder is the lessee of one party and the lessor of another. The owner of the sandwich lease is neither the fee owner nor the user of the property; he or she may be a leaseholder in a chain of lease, excluding the ultimate sublessee.
Scope of Work: The amount and type of information researched and the analysis applied to an assignment. Scope of work includes, but is not limited to, the following: a) the degree to which the property is inspected or identified; b) the extend of research into physical or economic factors that could affect the property; c) the extent of data research; and d) the type and extent of analysis applied to arrive at opinions and conclusions.
Section 38 Property: Refers to property described in Section 38 of the Internal Revenue Code and generally may be defined as tangible personal property used in a trade or business and located in the U.S. with certain limited exceptions in the case of aircraft, ships and offshore rigs. New Section 38 property is eligible for ITC (see Investment Tax Credit). Only a very limited amount of used property is eligible for ITC.
Self-Contained Appraisal Report: A written or oral report prepared under Standards rule 8-2-a-i through xii and advisor opinion 11 that must contain the following: i) State the identity of the client and any intended users by name or type; ii) State the intended use of the appraisal; iii) Describe information sufficient to identify the personal property involved in the appraisal, including the physical and economic property characteristics relevant to the assignment; iv) State the property interest appraised; v) State the type and definition of value and cite the source of the definition; vi) State the effective date of the appraisal and the date of the report; vii) Describe sufficient information to disclose to the client and any other intended users of the appraisal the scope of work used to develop the appraisal; viii) Clearly and conspicuously state all extraordinary assumptions and hypothetical conditions; and state that their use might have affected the assignment results; ix) Describe the information analyzed, the appraisal procedures followed, and the reasoning that supports the analyses, opinions, and conclusions; x) State the use of the property existing as of the date of value and the use of the personal property reflected in the appraisal and, when reporting an opinion of market value, state the appraiser's opinion of the highest and best use of the personal property; xi) State and explain any permitted departures from specific requirements of Standard 1 or 7 and the reason for excluding any of the usual appraisal approaches; xii) Include a signed certification in accordance with Standards Rule 2-3 or 8-3 (USPAP pages 63, 64, 65, 66, 149, 150, and 151).
Service Centers : A common industry term denoting a warehousing operation that purchases from a primary source (i.e. a mill) and sells that product to an end user, whether in its original form or with some value-added process.
Sheet Stock: Sheets of paper used in a sheet-fed press.
Sheeting (Cutting): The resizing of rolls of paper or film to shorter roll lengths or sheets.
Shoring: A number or system of 'shores' for steadying or supporting a wall. Typically a pole or a lattice structure.
Short-Dated: Pharmaceutical industry term that in this case is defined as any product with a remaining shelf life between 12 months and six months until expiration.
Signature: Personalized evidence indicating authentication of the work performed by the appraiser and the acceptance of the responsibility for content, analyses and the conclusions in the report.
Silica: A white or colorless crystalline compound, SiO2, occurring abundantly as quartz, sand, flint, agate, and many other minerals and used to manufacture a wide variety of materials.
Silicone: A polymer containing silicon and oxygen that is typically rubbery, water repellant, and extremely stable. The Company maintains some of this in inventory and uses it to repair form faces.
Silver: A lustrous, white, malleable and ductile precious metal.
Silver Solder: A group of alloys containing silver, zinc, and copper with at least 10% silver used for brazing or joining other metals.
Single Layer: The most common example of single layer construction is a 7 wire strand. It has a single wire center with six wires of the same diameter around it.
Skelp: Steel that is the entry material to a pipe mill. It resembles hot-rolled strip, but its properties allow for the severe forming and welding operations required for pipe production.
Slab: Steel that has been cast into a slab scheduled to approximately 8 inches thick and varying widths and lengths. Each slab is destined to make a single flat rolled coil.
Slab Formwork: A system used to pour a concrete floor or slab. These would typically consist of tables or flat panels supported by props.
Slide Gates: A device used to regulate or allow the flow of molten metal from a tundish, or ladle into a mold. This device is typically constructed of refractory materials.
Sling: Wire ropes made into forms, with or without fittings, for handling loads and made to permit the attachment of an operating rope.
Slit Coil: A coil that has been cut along its width into two or more coils.
Slitting: Dividing a web of paper in the lengthwise direction into two or more narrower webs.
Slotting Allowance: A manufacturer's incentive to a wholesaler or retailer to stock a new product.
Smoothness: The surface smoothness of paper is measured by the Bentsen smoothness test. The test measures the amount of air escaping between an annular ring and the material surface, and results are measured in ml/min. Papers having a value higher than 50 are usually referred to as Matt, below 50 as Silk (sometimes called Satin or Velvet).
Socket: The part of the prosthesis that encloses the residual limb.
Soffit: The underside of an architectural feature, such as a beam, arch, cornice, ceiling, or vault.
Soft Costs: See Indirect Costs.
Software: Comprised of the programs, instructions and routines that makes the use of a computer possible. Depending on context, can be both a tangible and intangible asset.
Softwood: Any tree in the gymnosperm group, including pines, hemlocks, larches, spruces, firs, and junipers. Softwoods often are called conifers although some, such as junipers and yews do not produce cones.
Sole-Source Supplier: A company's single source for a particular product or service. Sole-source relationships are particularity common in the automotive industry where there are large investments and setup costs involved with manufacturing particular products.
Solvent: A substance in which another substance is dissolved, forming a solution.
Special Identification Method: An inventory costing method under which the actual cost of specific items is used for determining cost of goods sold.
Special Interest Purchasers: Acquirers who believe they can enjoy post-acquisition economies of scale, synergies or strategic advantages by combining the acquired business interest with their own.
Specialty Adhesive: An adhesive with properties suited for use in limited, specific applications.
Specific Identification: An inventory system where the seller identifies which specific items are sold and which remain in ending inventory.
Specific Requirement: All of part of a Standards Rule of USPAP from which departure (see Departure Rule) is permitted under certain limited conditions.
Spinning: This refers to the process of making yarn.
Spirals: A spiral is a continual length of rebar that 'spirals' around the vertical bars from top to bottom.
Splicing: Interweaving of two ends of ropes so as to make a continuous or endless length with appreciably increasing the diameter. Also making a loop or eye in the end of a rope by tucking the ends of the strands.
Spot Market: Sales for delivery in less than three months.
Spreadsheet: An electronic worksheet similar in format to an accounting ledger contains rows (horizontal) and columns (vertical). Each row is assigned a number while each column is assigned a letter. The intersection of a row and a column is known as a cell (i.e.; A1).
Spun Yarn: A single yarn created by twisting a group of short staple fibers, which have been cut from longer continuous filament fibers. The yarn created from the combination of these two fibers is used for weaving or knitting fabrics.
Stabilizer: A substance that renders or maintains a solution, mixture, suspension, or state resistant to chemical change.
Stainless Steel: Consists of steel alloyed with at least 10% chromium and sometimes containing other elements that are resistant to corrosion or rusting.
Stainless Stell Rope: Wire rope made of chrome-nickel steel wires having resistance to corrosion.
Standard Costing: A procedure used to estimate the original cost of an asset by comparing it with the known average installed cost of an identical or similar unit at the estimated installation date of the subject property.
Standard Costs: Predetermined unit costs which are acceptable for financial reporting purposes if adjusted periodically to reflect current conditions and if their use approximates the results that would be obtained by applying one of the recognized cost assumptions.
Standard of Value: The identification of the type of value being utilized in a specific engagement; e.g. fair market value, fair value, investment value.
Stand-By Capacity: Machinery and equipment purchased in excess of needs so that extra capacity is available on a stand-by basis during peak usage periods or when other machinery is down for repair.
Staple Fibers: Short fibers, typically ranging from 1/2 inch to 18 inches in length. Wool, flax, and cotton exist only as staple fibers. Manmade staple fibers are cut to a specific length from continuous filament fiber and usually range from 1-1/2 inches to 8 inches in length. To form yarn, the staple fibers are twisted together.
Steel Coil: A common industry term denoting a long continuous sheet of steel coiled into a roll.
Steel Grades: The AISI (American Iron and Steel Institute) has established grades for the various types of steel. The first two digits indicate the grades of the steels, while the last two digits give the nominal carbon content of the alloy in hundredths of a percent.
Steel Sheet: A metal that has been formed into thin and flat pieces. The thickness of the sheet metal is called its gauge. Commonly used sheet metal ranges from 30 gauge to about 8 gauge. The larger the gauge number, the thinner the metal.
Steel Strip: A term that specifically references narrow steel material; it can be coiled or in flat lengths.
Steel Stud: A vertical wall member to which exterior or interior covering material, such as sheetrock may be attached.
Sterling Silver: Silver with a composition of 92.5% silver and 7.5% copper.
Straight-Line Depreciation Method (SL): An accounting method that assumes that depreciation is dependent on the passage of time and that allocates an equal amount of depreciation to each period of sale.
Strand: Several round or shaped wires helically laid about an axis.
Sublease: A transaction in which leased property is released by the original lessee to a third party and the lease agreement between the two original parties remains in effect.
Sub-Sea Umbilical Tubing : Underwater tubing used in offshore oil drilling for deep high-pressure applications. These tubes are usually corrosion resistant and depending on design, range in use from control wire conduits to fluid transmission.
Substitution: The appraisal principle that states that when several similar or commensurate commodities, goods or services are available, the one with the lowest price will attract the greatest demand and widest distribution.
Substrate: (1) The inactive supporting material used in a manufacturing process (2) The material of which something is made and from which it derives its special qualities.
Summary Appraisal Report: A written or oral report prepared under Standards rule 8-2b-i through xii and advisor opinion 11 that must contain the following: i) State the identity of the client and any intended users by name or type; ii) State the intended use of the appraisal; iii) Summarize information sufficient to identify the personal property involved in the appraisal, including the physical and economic property characteristics relevant to the assignment; iv) State the property interest appraised; v) State the type and definition of value and cite the source of the definition; vi) State the effective date of the appraisal and the date of the report; vii) Summarize sufficient information to disclose to the client and any other intended users of the appraisal the scope of work used to develop the appraisal; viii) Clearly and conspicuously state all extraordinary assumptions and hypothetical conditions; and state that their use might have affected the assignment results; ix) Summarize the information analyzed, the appraisal procedures followed, and the reasoning that supports the analyses, opinions, and conclusions; x) State the use of the property existing as of the date of value and the use of the personal property reflected in the appraisal and, when reporting an opinion of market value, state the appraiser's opinion of the highest and best use of the personal property; xi) State and explain any permitted departures from specific requirements of Standard 1 or 7 and the reason for excluding any of the usual appraisal approaches; xii) Include a signed certification in accordance with Standards Rule 2-3 or 8-3.
Summary Page: The portion of an appraisal report that summarizes the results of the appraisal.
Superadequacy: An excess in the capacity or quality of a structure or structural component.
Supplemental Standards: Requirements issued by governmental agencies, government sponsored enterprises or other entities that establish public policy which add to the purpose, intent and content of the requirements in USPAP that have a material effect on the development and reporting of assignment results.
Supply and Demand: In real estate appraisal context, the principle of supply and demand states that the price of real property varies directly, but not necessarily proportionately, with demand and inversely, but not necessarily proportionately, with supply.
Surface Finish: A reference to the surface of a board (lumber). The finish may rough, planed or further manufactured into a variety of building products.
Survivor Curve: A statistical curve showing the number of items within a given group that have remained in service at regular point in time (usually years).
Sustaining Capital Reinvestment: The periodic capital outlay required to maintain operations at existing levels net of the tax shield available from such outlays.
Swaged Rope: These ropes offer higher strength than standard ropes of the same diameter while providing greater resistance to drum crushing, scrubbing and similar surface wear. During manufacture, the rope is swaged to produce a compact cross-section with minimum voids and greater surface area.
Systematic Risk: The risk that is common to all risky securities and cannot be eliminated through diversification. The measure of systematic risk in stocks is the beta coefficient.
Tangible Assets: Assets that are of a physical and material nature, such as land, buildings, machinery and equipment, and others.
Tank Wrap: A type of welded wire fabric used to reinforce tanks.
Tax Lease: A lease in which the lessor claims tax benefits associated with equipment ownership; same as a True Lease.
TEFRA: Tax Equity and Fiscal Responsibility Act of 1982.
Tensile Strength: Expressed in pounds per square inch (psi), calculated by dividing the maximum load carried by the specimen during the tension test, by the original cross sectional area of the specimen.
Terephthalic Acid (TPA): A raw material used in fiber manufacturing.
Term: The period of time during which a lease is in effect.
Termination Date: The last day of a lease term.
Text Paper: Also known as Book paper, is a general term to describe a type of paper suitable for printing, (except newsprint and bristol), especially offset printing. Text paper can have many different finishes and may be coated or uncoated. More opaque than bond paper and good for two-sided printing, text paper is also characterized by excellent folding qualities and durability. Text paper has a basic size of 25" x 38" and the basis weights range from 22 to 150 pounds.
Thermoplastics/Thermosets: The two basic groups of plastic materials. Thermoplastic resins can be repeatedly melted and solidified by heating and cooling, whereas thermoset plastics react during processing to form bonds that cannot be re-melted and reprocessed once produced.
Thread Forming Screws: A screw when installed forms its own threads.
Threaded and Coupled (T&C): A process by which male (pin) threads are cut into the pipe and a coupling is attached to the pipe, to provide female threads for both lengths of pipe to be joined.
Ticking: Used to describe any sturdy, compactly woven cloth that prevents the penetration of the material by feathers or other fillers. This is traditionally used for items such as pillows, comforters, and mattresses.
Tie: A bolt threaded on both ends, similar to a stud, that is used to connect two forming panels together.
Tier 1 Automotive Supplier: A reference to automotive suppliers that typically sell to the major automakers.
Tier 2 Automotive Supplier: A reference to automotive suppliers that typically sell to other automotive suppliers, who in turn sell to the major automakers.
Timber Beam: A wooden beam used in a variety of structural supports. It is formed from three pieces, with flanges on the top and bottom, and has the profile of an I-beam.
Time Value of Money: The time value of money concept is that a dollar received today is worth more than a dollar to be received in the future, because the dollar received today can be invested and earn interest or other benefits.
Tire Bead: A tire component that secures a tire to a wheel. Several wraps of bead wire are wound into a hoop shape known as a tire bead and the bead is incorporated into the construction of a tire. Beads are located in the tire areas that come into contact with a wheel.
Tissue Paper: Soft, lightweight paper, often creped, generally between 17 and 30g/m2 in weight, which is used for hygienic, household, and several other purposes.
Titer: In the case of hyper-immune plasma, the concentration of a specific antibody in the plasma.
Title: The combination of all elements that constitute proof of ownership.
Tolerance: The total amount by which a quantity is allowed to vary; thus the tolerance is the algebraic difference between the maximum and the minimum limits.
Tons: In this report all references to tons are in net tons or short tons, or 2,000 pounds. This is a standard weight unit of measure for OCTG products.
Total Life: Total life may have three definitions depending on the age and use of an asset: a) for a new asset, it is the life in years that can be expected; b) for a used asset, it is the sum of the effective age plus the expected remaining life; and c) for an asset that has been removed from service, it is the actual number of years the asset was in service.
Total Loss: A loss of the entire value of the property; entails payment of the face amount of an insurance contract, with an inflation guard provision on the amount, or payment of replacement cost, whichever is lower.
Totes: A semi-rigid or non-rigid container used in the storage and transportation of chemicals.
TRAC Lease: A lease with a "terminal rental adjustment clause"; used in automobile leases to describe an open-end lease. TRAC leases that otherwise meet True Lease guidelines are entitled to be treated as True Leases by lessor even though the residual risk is shifted to the lessee.
Transaction Method: See Merger and Acquisition Method.
Trending: A method of estimating a property's Reproduction Cost New (not replacement part new) in which an index or trend factor is applied to the property's historical cost to convert the known cost into an indication of current cost. Simply put, trending reflects the movement of price over time. Also back trending where the historical cost is estimated by applying a factor to the asset's reproduction cost (see Indexing).
True Lease: A true lease is one in which the lessor is the legal owner holding title to the asset being leased; as such, the lessor has the rights and ownership for tax purposes. Therefore, a true lease is a transaction that qualifies as a lease under the Internal Revenue Code so that the lessee can claim rental payments as tax deductions and the lessor can claim tax benefits associated with equipment ownership such as ACRS/MACRS, (see Modified Accelerated Cost Recovery Schedule) depreciation and ITC (see Investment Tax Credit).
Tubing: When referring to OCTG, tubing is a separate pipe used within the casing to conduct the oil or gas to the surface. Depending on conditions and well life, tubing may have to be replaced during the operational life of a well.
Tungsten Inert Gas (TIG) Welding: An arc welding process that uses an arc between a tungsten electrode and the weld pool.
UCC: The Uniform Commercial Code. It has been adopted by most states to govern commercial transactions.
Uniform Standards of Professional Appraisal Practice (USPAP): A set of professional appraisal standards established by the Appraisal Standards Board of the Appraisal Foundation. Developed in 1986-87 by the Ad Hoc Committee on Uniform Standards, they have been adopted by major appraisal organizations and federal agencies in North America and are generally recognized as the accepted standards of appraisal practice.
Units of Comparison: The components into which a property may be divided for purposes of comparison; e.g., price per square foot, front foot, cubic foot, room, bed, set, apartment unit.
Unlevered Beta: The beta reflecting a capital structure without debt.
Unrecovered Cost: Difference between historical/original cost and the depreciation reserve; synonymous with Net Book Value.
Unsystematic Risk: The portion of total risk specific to an individual security that can be avoided through diversification.
Useful Life: The period of time over which property may reasonably be expected to perform the function for which it was designed.
Vacuum Degassed: A process which subjects molten metal to a vacuum to remove hydrogen and/or carbon, to improve the quality of the product and to shorten the processing cycle. This process is not utilized for all steel products.
Valuation: An appraisal is often referred to as an unbiased opinion of value of an identified property based upon the investigation and analysis of pertinent data and the application of appropriate analytical techniques. An appraisal according to USPAP: The act or process of developing an opinion of value; an opinion of value; of or pertaining to appraising and related functions such as appraisal practice or appraisal services.
Valuation Date: The specific point in time as of which the valuator's opinion of value applies (also referred to as "Effective Date" or "Appraisal Date").
Valuation Method: Within approaches, a specific way to determine value.
Valuation Procedure: The act, manner and technique of performing the steps of an appraisal method.
Valuation Ratio: A fraction in which a value or price serves as the numerator and financial, operating or physical data serve as the denominator.
Value: The amount, relative worth, utility or importance of an item which may or may not be equal to price or cost.
Value to the Owner: NOTE: in Canada, see Investment Value.
Vapor Barrier Mill Wrap: Paper with water-vapor resistant properties, used in the packaging of sensitive materials.
Variable Expenses: Operating expenses that generally vary with the level of occupancy or the extent of services provided.
Variable Operating Costs: Those elements that contribute to operating obsolescence.
Vehicle Platforms: The year, model, and make of a particular automotive vehicle.
Vinyl: Any of various typically tough, flexible, shiny plastics, often used for coverings and clothing.
Virgin: A term referring to material that has been manufactured from a primary source. In the case of plastic it has been manufactured from chemicals as opposed to have been recycled from a previously manufactured plastic component.
Vitamin B-3: One of the most important vitamins in animal feed formulations. Niacinamide, the essential building block for the coenzymes NAD, is an essential element in animal feed because it protects the mucous membrane, it keeps the skin and central nervous system healthy, and it helps maintain healthy bones. It is also increasingly used in cosmetics and toiletries such as shampoo, mascara, acne cream, and cellulite cream.
Voting Control: De jure control of a business enterprise.
Waler: A steel flange used as a structural rib to support a series of beams or forms. Related terms would include wale and waling.
Wane: A lumber defect referring to the absence of wood or the presence of bark along an edge or corner.
Warp Knit: A knitted fabric construction in which yarns are formed into lengthwise stitches. Due to its construction, warp knits are generally less elastic than weft knits. Some examples are tricot knits and raschel knits.
Warrington: Strand construction with two layers with one diameter of wore in the inner layer, and two diameters of wire alternating large and small in the outer layer. The larger outer layer wires rest in the valleys, the smaller ones on the crowns.
Warrington Seale (WS): The name for a type of strand pattern characterized by having one of its outer layers (usually the outer) made up of an arrangement of alternately large and small wires.
Weatherable Film: Weather resistant properties suitable for use in outdoor environments.
Weave: Process by which wires are woven in various patterns into wire mesh or wire cloth materials.
Web Press: A press which prints on a roll of paper.
Weighted Average: The mean of a set of numbers that is calculated by applying a weight factor to each component, such that the size or importance of each component relative to the whole is reflected.
Weighted Average (Inventory): An inventory costing method where ending inventory and cost of goods sold are priced at the weighted average cost of all items available for sale.
Weighted Average Cost of Capital (WACC): The cost of capital (discount rate) determined by the weighted average, at market value, of the cost of all financing resources in the business enterprise's capital structure. It is the basis of the discount rate that is used in a discounted cash flow analysis.
Welded Tubing: Tubular products that are roll formed and then welded continuously along a longitudinal seam.
Welded Wire Fabric: A mesh of wire electrically welded into a fabric that is used to reinforce large concrete structures. Welded wire concrete reinforcing products including reinforcing for concrete pipe, building mesh and engineered structural mesh manufactured in standard styles or produced to unique customer specifications. It is primarily used to control concrete cracking and minimize crack width.
West Coast Inspection Bureau: A trade group that establishes grades and licenses graders for Douglas fir, Hem-Fir, Western Red Cedar, and Spruce-Pine-Fir.
West Texas Intermediate Crude Oil: An API grade of crude oil, the price point of which is measured by the spot market WTI crude delivered to Cushing, Oklahoma. This crude is a low sulfur grade of crude oil from the Permian basin in Texas, with no more than 0.42% sulfur by weight, with not less than 37° API gravity and not more than 42° API gravity.
Wet Hire: Refers to rental agreements that include personnel as well as equipment.
Wholesale Acquisition Cost (WAC): The price paid by the wholesaler for drugs purchased from the wholesaler's suppliers (manufacturers). On financial statements, the total of these amounts equals the wholesaler's cost of goods sold. Publicly disclosed or listed WAC amounts may not reflect all available discounts.
Wholesale Price: The sales price of a good or item under normal business terms and conditions.
Wicket: A wire prong that is used to hold bags. For example, they are used for grocery bags that are hung in a checkout lane.
Wire: (1) A solid section, including rectangular flat wire but excluding other flat products, furnished in coil or on spool, reels, or bucks (2) A slender filament or rod of metal arranged in single or multiple arrays.
Wire Rod: (1) Semi-Finished product intended primarily for the manufacture of wire. They are hot rolled generally to an approximate round cross section in continuous lengths coil (2) A thin, continuously cast piece of metallic bar with a circular profile formed in a coil.
Wire Rope: Several wire strands helically laid about an axis.
Wood Free: Paper made wholly from chemical pulp and free from wood-based impurities, such as lignin, which are present in mechanical pulp.
Word Processing: An electronic system that rapidly processes the text of letters, reports, etc.
Workfile: Documentation necessary to support an appraiser's analyses, opinions and conclusions.
Work in Process (WIP): An inventory account unique to the manufacturing or production area to which all manufacturing costs incurred and assigned to products are charged. The balance at period-end represents all costs assigned to goods partially completed at that particular time. For a manufacturing firm, the inventory or partially completed products.
Working Capital: The excess of current assets over current liabilities; represents the capital immediately available to sustain continued business operations.
Wove Paper: Bond paper with a fairly smooth, slightly patterned finish is known as wove finish.
Writing Grade Paper: See Wove Paper.
Yarn: A continuous strand of textile fibers that falls into two basic classes: spun or continuous filament. Spun yarn is a grouping of virtually endless parallel continuous strands. Yarn, either spun or filament, is the basic textile raw material and is further processed into fabric, thread, twine, or cable. Yarn can be woven, knitted, crocheted, tatted, netted, or braided depending on the desired result and the yarn character.
Yield: The actual rate of return on an investment including any excess or deficit over the original capital investment at the end of the investment period.
Yield Capitalization: The capitalization method used to convert future benefits into present value by discounting each future benefit at an appropriate yield rate or by developing an overall rate that explicitly reflects the investment's income pattern, value change and yield rate.
Yield Strength: (1) The stress at which a material exhibits a specified limiting deviation from the proportionality of stress or strain (2) The tensile stress required to produce permanent elongation of a steel tube.