What Is Accumulated Benefit Obligation (ABO)? Accumulated benefit obligation (ABO) is the approximate amount of a company’s pension plan liability at a single point in time. ABO is estimated based on the assumption that the pension plan is to be terminated immediately; it does not consider any future salary increases. This differs from the projected
What Is Accumulated Depreciation? Accumulated depreciation is the cumulative depreciation of an asset up to a single point in its life. Accumulated depreciation is a contra asset account, meaning its natural balance is a credit that reduces the overall asset value. Key Takeaways Depreciation is recorded to tie the cost of using a long-term capital
What Is Accumulated Earnings and Profits (E&P)? Accumulated earnings and profits (E&P) is an accounting term applicable to stockholders of corporations. Accumulated earnings and profits are a company’s net profits after paying dividends to the stockholders, serving as a measure of the economic ability of a corporation to pay such cash distributions. Key Takeaways Accumulated
What Is an Accumulated Earnings Tax? An accumulated earnings tax is a tax imposed by the federal government on companies with retained earnings deemed to be unreasonable and in excess of what is considered ordinary. Essentially, this tax encourages companies to issue dividends, rather than retain their earnings. The IRS allows for certain exemptions to
What Is an Accumulated Fund? An accumulated fund is where budgetary surpluses are held by a nonprofit organization (NPO), and it is analogous to the corporate profit earned by a traditional entity based on its retained earnings. Key Takeaways An accumulated fund holds excess money received by a non-profit organization (NPO).Similar to the retained earnings
What Is Accumulated Income? Accumulated income, commonly referred to as retained earnings, includes the portion of net income that is retained by a corporation over time, rather than being distributed as dividends. Any accumulated income is typically used by the corporation to reinvest in its principal business or to pay down its debt. Key Takeaways
What Is an Accumulated Income Payment (AIP)? Accumulated income payments (AIP) refers to funds withdrawn from a Canadian Registered Education Savings Plan (RESP) if the beneficiary decides not to attend college. In this case, the returns generated in the RESP aren’t forfeited as long as the subscriber fulfills certain criteria. Key Takeaways Accumulated income payments
What Is an Accumulation Bond? An accumulation bond is a type of security that is sold at a discount, known as an original issue discount (OID). An OID is a discount from par value (also known as “face value”) at the time the bond is issued. The bond will gradually return to that value over a given period
What Is the Accumulation/Distribution Indicator (A/D)? The accumulation/distribution indicator (A/D) is a cumulative indicator that uses volume and price to assess whether a stock is being accumulated or distributed. The A/D measure seeks to identify divergences between the stock price and the volume flow. This provides insight into how strong a trend is. If the
What Is an Accumulation Option? An accumulation option is a policy feature of permanent life insurance that reinvests dividends back into the policy, where it can earn interest. Some types of insurance pay dividends to their policyholders each year when the insurance company performs better than estimated. Accumulation options are one of several options policyholders have for what
