What Is the Applicable Federal Rate (AFR)? The applicable federal rate (AFR) is the minimum interest rate that the Internal Revenue Service (IRS) allows for private loans. Each month the IRS publishes a set of interest rates that the agency considers the minimum market rate for loans. Any interest rate that is less than the
What Is an Application Programming Interface (API)? An application programming interface (API) is a set of programming codes that queries data, parse responses, and sends instructions between one software platform and another. APIs are used extensively in providing data services across a range of fields and contexts. APIs have become increasingly popular tools, with the
What Is an Application of Retention? An application of retention is a contractual clause included in many insurance policies. The purpose of the clause is to specify what portion of any potential damages will need to be paid for by the policyholder. Damages in excess of this retained portion would then be covered by the
What Is Apportionment? Apportionment applies to many contexts. Where insurance is concerned, an apportionment is the allocation of a loss between all of the insurance companies that insure a piece of property. This allocation is used to determine the percentage of liability held by each insurer. For example, three insurers that each cover $60,000 on a $120,000
What Is an Appraisal? An appraisal is a valuation of property, such as real estate, a business, collectible, or an antique, by the estimate of an authorized person. The authorized appraiser must have a designation from a regulatory body governing the jurisdiction of the appraiser. Appraisals are typically used for insurance and taxation purposes or
What Is the Appraisal Approach? The appraisal approach describes the process of estimating an asset’s value, based on factors such as its cost, the income it generates, and its fair market value (FMW) compared to that of similar assets. The resulting appraisal figure is essentially an educated guess that attempts to forecast the price an asset would
What Is Appraisal Capital? In accounting, appraisal capital is an entry on a company’s balance sheet. Appraisal capital is created when the appraised value of a company’s net assets exceeds its book value. When this situation occurs, the company’s book value is listed as its actual value. The difference between the two values is then
What Are Appraisal Costs? Appraisal costs are a specific category of quality control costs. Companies pay appraisal costs as part of the quality control process to ensure that their products and services meet customer expectations and regulatory requirements. These costs could include expenses for field tests and inspections. Key Takeaways Appraisal costs are fees a
What Is Appraisal Fraud? Appraisal fraud is a form of mortgage fraud, whereby the value of a home is deliberately appraised at an inflated amount, well above its fair market value (FMV). Appraisal fraud can occur when an appraiser is in on the scam, and dishonestly overstates the value of the property. It can also
What Is the Appraisal Method of Depreciation? The appraisal method of depreciation is a simplified method used to evaluate the economic loss in value of an asset from the beginning to the end of a reporting period. The difference between the appraised values constitutes the amount of depreciation that can be recorded. It is most
