accretion

play
noun ac·cre·tion \ ə-ˈkrē-shən \
Updated on: 26 Jul 2017

Definition of accretion

1 :the process of growth or enlargement by a gradual buildup: such as
a :increase by external addition or accumulation (as by adhesion of external parts or particles)
b :the increase of land by the action of natural forces
2 :a product of accretion; especially :an extraneous addition
  • accretions of grime

accretionary

play \-shə-ˌner-ē, -ˌne-rē\ adjective

accretive

play \ə-ˈkrē-tiv\ adjective

Examples of accretion in a Sentence

  1. rocks formed by the slow accretion of limestone

  2. There was an accretion of ice on the car's windshield.

Recent Examples of accretion from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'accretion.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Did You Know?

The slow accretion of scientific knowledge over many centuries has turned into an avalanche in our time. Any accretion of ice on a grounded jet will result in takeoff delays because of the danger it poses. The land area of the Mississippi Delta increases every year from the accretion of soil washed down the Mississippi River, though the accretions happen so slowly that it's difficult to detect any increase at all. Accretion is often used in scientific writing; its usual verb form, accrue, is more often used in financial contexts ("This figure doesn't count the accrued interest on the investments").

Origin and Etymology of accretion

borrowed from Latin accrētiōn-, accrētiō "increase," from accrē- (stem of accrēscere "to increase, be added") + -tiōn-, -tiō, suffix of action nouns — more at accrue


Financial Definition of ACCRETION

accretion

What It Is

Accretion is growth, typically in earnings, usually after an acquisition or other significant event. In the bond world, accretion refers to the capital gains earned on a bond purchased at a discount.

How It Works

Let's assume Company XYZ decides to buy Company ABC. Company XYZ's earnings per share before the acquisition are $0.15. Due to the acquisition, its earnings per share shoot up to $0.25, which makes the acquisition accretive to earnings by $0.10 per share.

In the bond world, let's assume that Jane Doe buys a 10-year bond issued by IBM. The bond has a face value of $1,000, but Jane buys it at a discount and pays $900. Over the next 10 years, Jane will see $100 of accretion on her bond ($1,000 - $900). Even though Jane doesn't actually receive the $100 until the bond matures, she must pay taxes on the accretion as it occurs over the 10 years.

Why It Matters

Accretion is a good thing for companies because it adds to the bottom line and thus increases shareholder value, which is the goal of every company. Of course, not all acquisitions turn out to be accretive, despite all the forecasts saying so. Accordingly, the manner in which an acquirer integrates a target into its operations, as well as the quality of the strategic fit between the two entities, are both key to ensuring that the expected gains materialize.

Any bond purchased at a discount accretes, and knowing to anticipate and calculate this accretion can make a big difference in an investor's tax situation.


ACCRETION Defined for English Language Learners

accretion

play
noun

Definition of accretion for English Language Learners

  • : a gradual process in which layers of a material are formed as small amounts are added over time

  • : something that has grown or accumulated slowly : a product or result of gradual growth


Medical Dictionary

accretion

play
noun ac·cre·tion \ ə-ˈkrē-shən \

medical Definition of accretion

: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

accretionary

play \-shə-ˌner-ē\ adjective

Law Dictionary

accretion

play
noun ac·cre·tion \ ə-ˈkrē-shən \

legal Definition of accretion

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 P. 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


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