Accretion expense


Accretion expense

In accounting, accretion expenseFact|date=February 2007 is the expense created when updating the present value(PV) of a financial instrument.

For example, if one originally recognizes the present value of a liability at $650, which has a future value (FV) of $1000, every year one must increase the PV of the liability as it comes closer to its FV. If the above liability, for example an asset retirement obligation, had a discount rate of 10%, accretion expense in year 1 would be $65, and the PV of the liability at the end of year 1 would be $715.Fact|date=February 2007


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