Mergers & Acquisitions

Resources: Glossary

Don’t be confused or intimidated by any terms or abbreviations in the M&A world. You’ll find answers here.

Cost Basis

Definition

The original cost of an asset as it appears on the balance sheet.

See Also

Accrual basis, adjusted basis, cash basis, depreciation, allocation of purchase price.

Tips

The value of an asset, or its adjusted basis, has little to do with the actual value of a business. The primary relevance of the adjusted basis of an asset is when calculating the taxes due when selling a business. The tax due on the sale of a business is calculated as the gain on any difference between the adjusted basis and the amount allocated to the asset.