allocation

The identification of costs or revenues with specific activities, assets, liabilities, or time periods. An example of the time allocation of costs is the recognition of *amortization expenses over an asset’s *useful life. An example of the allocation of costs to activities is the identification of production *over-heads to manufactured products in *absorption costing methodologies. The term allocation is frequently used to refer to the identification of an entire cost or revenue with a single, corresponding activity, asset, liability, or time period - in contrast, the term *apportionment can be used to refer to the division of costs and revenues between various items. However, the two words are often used interchangeably.