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Accounting
Unrealised Loss
A decrease in the value of an asset that has not yet been sold, so the loss exists only on paper.
Unrealised losses must still be recognised under fair value accounting to keep the balance sheet honest. They can affect loan covenants or investor perception even if no cash has been lost. Impairment rules may force recognition in profit or loss in some cases.
It's like your phone losing value the moment you take it out of the box — the loss is real on paper but you haven't felt it yet.
Real world: A company holds bonds whose market value drops due to rising interest rates. The unrealised loss reduces the asset value and equity (via other comprehensive income) but does not hit the income statement as a realised loss until the bonds are sold.
💡 Unrealised losses remind everyone that market values can fall — even if you haven't sold yet.