stock appreciation

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The part of the change in the value of the stocks held by a business over any period which is due to price changes. Rising commodity prices cause this to be positive; falling commodity prices cause it to be negative. During inflationary periods stock appreciation causes real profits to be overestimated: firms may be allowed to subtract it in calculating their taxable profits, since without this adjustment they could be paying tax on nominal profits while real profits were in fact negative.

Subjects: Business and Management — Economics.

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