Definition
Under the Income Tax Act, ACB is the original purchase price of a security plus any reinvested distributions that have already been included in income (e.g., reinvested dividends declared as income), minus any return-of-capital distributions that reduced the cost. For identical properties (shares of the same class from the same issuer), the ACB is pooled: when new shares are bought, the total cost of all identical shares is divided by the total number of shares to arrive at an average per-share ACB. When shares are sold, the capital gain or loss equals the proceeds minus (ACB per share x shares sold) minus selling costs.
Source
Income Tax Act s.47, s.54 (definition of adjusted cost base)