1. to assimilate, transfer, or incorporate amounts in an account or a group of accounts in a manner in which the first entity loses its identity and is "absorbed" within the second entity. Examples include the sequential transfer of expenditure account amounts to WORK-IN-PROCESS, finished goods, and COST OF SALES. 2. to distribute or spread costs by the process of proration or allocation. See also ABSORPTION COSTING.

1. to take in a small item so that it forms part of a larger one  a business which has been absorbed by a competitor a small business which has been made part of a larger one 2. to assign an overhead to a particular cost centre in a company’s production accounts so that its identity becomes lost.