Ads end in 20 seconds
This content is free thanks to our sponsors
Sponsored Ad – I may earn a commission if you click and buy
Accounting
Unrealised Gain
An increase in the value of an asset that has not yet been sold, so the profit exists only on paper.
Unrealised gains are important for fair value accounting (e.g., investment securities). They affect equity but not taxable profit until realised. Companies must disclose them clearly so users understand the difference between paper gains and cash profits.
It's like your house going up in value — you're richer on paper, but you haven't cashed in until you sell.
Real world: A company holds shares that rose from £100,000 to £150,000. The £50,000 unrealised gain is shown in other comprehensive income or revaluation reserve, but it does not affect reported profit until the shares are sold.
💡 Unrealised gains make the balance sheet look stronger but aren't real money until the asset is sold.