What is an unrealized gain or loss?
Its a gain or loss should you have sold your asset right now based on how much you bought the security and what the current price of the security is. When you actually sell it, thats when you realize the Gain or Loss
Calculated by the change in the MVA (the difference between market value and original cost) from one period to the next.
I don’t remember the definition, but will explain from business: If there are stocks/bonds in the Balance Sheet, than Unrealized gains/losses is Number of FI*(Current Market Price - Purchase Price) ( for bonds that will be difference in Clean price). If FI classified as Trading portfolio - Unrealized G/L are reflected in Income Statement If classified as Available-for-Sale - reflected in Balance Sheet as FI fair market value Am I right, guys ?
And a simple example : You have purchased 100 Stocks at 10 in Jan Then prices at the last day of every month are Price Unrealized G/(L) in Income Statement Feb 11 =100*(11-10) = 100$ Mar 15$ =100*(15-11) = 400$ Apr 12$ =100*(12-15) =(300$) and so on
right. for available for sale secruity, unrealized G/L goes to comprehensice income in equity in balance sheet, and not reflect in income statement. for trading, unrealized G/L goes to balance sheet directly (reflect both realize and unrealize thus fair value), and reflect in incomestatement.
achogogo Wrote: ------------------------------------------------------- > right. > > for available for sale secruity, unrealized G/L > goes to comprehensice income in equity in balance > sheet, and not reflect in income statement. > > for trading, unrealized G/L goes to balance sheet > directly (reflect both realize and unrealize thus > fair value), and reflect in incomestatement. Yes but dont forget unrealized G/L for available for sale securities MAY appear on the I/S under IAS.
doworkson Wrote: ------------------------------------------------------- > Calculated by the change in the MVA (the > difference between market value and original cost) > from one period to the next. Thats what I thought it was too, but I did a question where the unrealized is NOT the change in MVA but just the market price - book value cost only for that year. Can someone verify this.
If that was on a CFA sample it was because the security was bought in that year, therefore the change in MVA would be = (MKT-BOOK)-(0)
ah, I didn’t remember where I had done it - thanks for clearing it up for me 
No prob, did that sample last night, so it’s still fresh.