Hi, Can someone shed some light on this topic. What is difference between realised and unrealised gains/loss?
Realized gain: Machine sold, cash received was more than (historical cost - accumulated depreciation) Realized gain: sold a security at a capital gain Unrealized gain: bought security, security price increased, but security was not yet sold (still held in portfolio at the end of the year) Unrealized gain: have a lot of GBP holdings, GBP appreciated, gain due to currency translation but not yet realized Unrealized loss: bought security, security tanked, still holding on to it at the end of the accounting cycle etc these are just a couple of general examples to let you know what they mean
Ah thanks… I think the point i was missing was Gains or losses are “realized” when a stock is sold.
this stuff is important from a cash flow stmt perspective as well as what goes in comprehensive income, etc. CI = net inc + OCI
Unrealized Gain: A profit that results from holding on to an asset rather than cashing it in and using the funds. Realized Gain: A gain resulting from selling an asset at a price higher than the original purchase price.