ACCRETION

ac·cre·tion   (ə-krē'shən)    n.   Growth or increase in size by gradual external addition, fusion, or inclusion. Something contributing to such growth or increase: "the accretions of paint that had buried the door's details like snow" (Christopher Andreae). Slow addition to land by deposition of water-borne sediment. An increase of land along the shores of a body of water, as by alluvial deposit. Biology The growing together or adherence of parts that are normally separate. Geology Slow addition to land by deposition of water-borne sediment. An increase of land along the shores of a body of water, as by alluvial deposit. Astronomy An increase in the mass of a celestial object by the collection of surrounding interstellar gases and objects by gravity. [Latin accrētiō, accrētiōn-, from accrētus, past participle of accrēscere, to grow; see accrue.] ac·cre'tion·ar'y (-shə-něr'ē), ac·cre'tive adj.

accretion 

Accretion

1. Asset growth through addition or expansion.

2. In reference to discount bonds, it describes the accumulation of value until maturity.

Investopedia Commentary

1. Accretion can occur through a company's internal development or by way to mergers and acquisitions.

2. Bonds at discount are sold below face value and mature at par. In the duration between the bond's issuance and maturity, no additional value is actually being accumulated within the bond but accretion occurs with the paper or implied capital gain.

Related Links

Is Growth Always A Good Thing?

See also: Accretive Acquisition, Asset, Depreciation, Dilutive Acquisition, Discount Bond, Imputed Interest

Also spelled: accrete

accretion

The accumulation of capital gains on discount bonds with the expectation that the securities will be redeemed at maturity. Excluding municipals, the amount of annual accretion is taxable on an original-issue discount bond even though only a small amount of interest or no interest at all is paid each year. See also imputed interest.

Main Entry: ac·cre·tion
Pronunciation: &-'krE-sh&n
Function: noun
1 : the process or a result of growth or enlargement: as a : the increase or extension of the boundaries of land or the consequent acquisition of land accruing to the owner by the gradual or imperceptible action of natural forces (as by the washing up of sand or soil from the sea or a river or by a gradual recession of the water from the usual watermark); also : accession in which the boundaries of land are enlarged by this process —compare AVULSION, RELICTION b : increase in the amount or extent of any kind of property or in the value of any property <accretions to a trust fund resulting from the increase in value of…securities in which its corpus is invested —In re Estate of Gartenlaub, 244 Pacific Reporter 348 (1926)>
NOTE: Accretion in value of the principal of a trust is generally not considered income. c : enlargement of a bargaining unit by the addition of new employees
2 in the civil law of Louisiana : the passing to an heir or conjoint legatee of the right to accept a portion of a succession resulting from the failure of a coheir or colegatee to take his or her own share

Main Entry: ac·cre·tion
Pronunciation: &-'krE-sh&n
Function: noun
: the process of growth or enlargement; especially : increase by external addition or accumulation (as by adhesion of external parts or particles) —compare APPOSITION 1, INTUSSUSCEPTION 2 —ac·cre·tion·ary /-sh&-"ner-E/ adjective

accretion ac·cre·tion (ə-krē'shən)
n.

1. Growth or increase in size by gradual external addition, fusion, or inclusion.

2. Increase by addition to the periphery of material of the same nature as that already present, as in the growth of crystals. Also called accrementition.

3. Foreign material, such as plaque or calculus, collecting on the surface of a tooth or in a cavity.

4. The growing together or adherence of body parts that are normally separate.