Original Cost

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Dictionary Says

Definition of 'Original Cost'

The total costs associated with the purchase of an asset. The original cost of an asset takes into consideration all of the costs that can be attributed to its purchase and to putting the asset to use. These costs can include such factors as the purchase price, commissions, transportation, appraisals, warranties and installation. Original cost can be used to value an asset type, including equipment, real estate and security instruments.

Investopedia Says

Investopedia explains 'Original Cost'

For example, the purchase price of a piece of equipment is $20,000. The purchase also involves $1,000 in fees, $700 in shipping and delivery costs, and $3,000 for installation and warranty. The original cost of this piece of equipment would be $20,000 + $1,000 + $700 + $3,000 = $24,700.

Determining an asset's original cost is important in calculating the asset's tax basis. The original cost of an asset encompasses more than the asset’s purchase price, and the costs added together can reduce the potential taxable gain on the sale of the asset. The tax basis can be calculated by taking the original cost and subtracting the accumulated depreciation of the asset.
Search results for

'Original Cost'

  • Taking The Bite Out Of Annuity Losses

    http://www.investopedia.com/articles/pf/05/AnnuityLosses.asp
    ... Exchanges using the 1035 tax provision will not qualify the loss for a tax deduction;
    however, the new contract can maintain the original cost basis. ...

  • How do I figure out my cost basis on a stock investment?

    http://www.investopedia.com/ask/answers/05/costbasis.asp
    ... Therefore, if you were to sell 1,500 shares, the first 1,000 shares would be based
    on the original or oldest cost basis of $10, followed by 500 shares at a ...

  • Series 65 Study Guide - Taxation Issues - Holding Period and Cost ...

    http://www.investopedia.com/exam-guide/series-65/taxation/holding-period-cost-basis.asp
    ... Let's say you are given shares of stock, and the original owner's cost basis was
    $70 a share. On the date of the gift, the shares are trading at $60. ...

  • What is the difference between amortization and depreciation?

    http://www.investopedia.com/ask/answers/06/amortizationvsdepreciation.asp
    ... It is important to mention that these methods are calculated by subtracting
    the asset's salvage value from its original cost. Amortization ...

  • An Introduction To Depreciation

    http://www.investopedia.com/articles/fundamental/04/090804.asp
    ... most common methods: Straight-line method - This takes an estimated scrap value
    of the asset at the end of its life and subtracts it from its original cost. ...

  • Using Tax Lots: A Way To Minimize Taxes

    http://www.investopedia.com/articles/05/taxlots.asp
    ... However, you still need to keep track of your original cost basis on securities
    that you purchased as you must report your short-term and long-term gains for ...

  • Rolling Over Company Stock: A Decision To Think Twice About

    http://www.investopedia.com/articles/retirement/05/062305.asp
    ... Mike is 57, about to retire and has company stock in his 401(k) plan. The original
    cost of the stock was $200,000, but it is now worth $1 million. ...

  • Discover Master Limited Partnerships

    http://www.investopedia.com/articles/basics/07/ml_partnerships.asp
    ... to investors often is only 10-20% of the cash distribution, while the other 80-90%
    is deemed a return of capital and subtracted from the original cost basis of ...

  • Timeshares: Dream Vacation Or Money Pit?

    http://www.investopedia.com/articles/pf/08/timeshare.asp
    ... their efforts to trade their slot so that they can visit a different destination
    are willing to give their timeshares away at a fraction of the original cost. ...

  • An Introduction To Reverse Convertible Notes (RCNs)

    http://www.investopedia.com/articles/bonds/08/reverse-convertible-note.asp
    ... maintain a secondary market. However, this is not guaranteed; understand
    that you may get less than your original cost if you sell. ...

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