Amount Realized

AAA

DEFINITION of 'Amount Realized'

The gain or loss resulting from a sale of an asset. The amount realized encompasses all forms of compensation, including cash, the value of any property received as payment and any liabilities that the purchaser assumes as a result of the transaction.

The amount realized does not include transaction costs such as commissions and other related fees.

INVESTOPEDIA EXPLAINS 'Amount Realized'

To calculate the amount realized, simply take the difference of the total consideration given and subtract the cost basis. If the difference is positive, then the amount realized is a gain. If the difference is negative, the amount realized is a loss.

The total consideration will also include any liabilities assumed, as in this example:

Assume you have sold some property that has an outstanding mortgage of $75,000 to a buyer. The buyer pays you $40,000 and assumes the mortgage. In this case, you would have realized a total gain of $115,000 ($40,000 payment + $75,000 mortgage transferred).

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Realized Loss

    A loss is recognized when assets are sold for a price lower than ...
  3. Realized Gain

    A gain resulting from selling an asset at a price higher than ...
  4. Accounting

    The systematic and comprehensive recording of financial transactions ...
  5. Asset

    1. A resource with economic value that an individual, corporation ...
  6. Cost Basis

    1. The original value of an asset for tax purposes (usually the ...
Related Articles
  1. You shouldn't have to be confused in making a choice on whether to sell or hold your investments.
    Retirement

    To Sell Or Not To Sell

    Learn some tips on how to exit a position to the best of your advantage.
  2. Taxes

    Capital Gains Tax 101

    Find out how taxes are applied to your investment returns and how you can reduce your tax burden.
  3. Investing

    How are realized profits different from unrealized or so-called "paper" profits?

    When buying and selling assets for profit, it is important for investors to differentiate between realized profits and gains, and unrealized or so-called "paper profits".Simply put, realized ...
  4. Fundamental Analysis

    How should a company budget for capital expenditures?

    Learn the difference between capital expenditures and operational expenses, and discover the importance of budgeting for capital expenditures.
  5. Fundamental Analysis

    What is accrual accounting in Oracle Apps?

    Learn more about Oracle Applications, an enterprise software system that enables businesses to streamline information systems – including accrual accounting.
  6. Fundamental Analysis

    Why do companies publish P&L statements?

    Understand the basics of the profit and loss statement, including why it is published and how it is used to assess financial stability.
  7. Investing Basics

    What is the first day of the quarter?

    Learn when the first day of the quarter is. Explore why investors and analysts prefer to compare results year-over-year due to seasonality.
  8. Investing Basics

    What is the difference between a quarter and a year in finance?

    Examine the difference between a fiscal quarter and a fiscal year. Learn why investors examine both quarterly and annual growth rates.
  9. Fundamental Analysis

    What is the first day of the first quarter?

    The first day of companies' fiscal years varies based on industry cycles. The timing is especially important because annual reports can have unexpected effects.
  10. Fundamental Analysis

    What is the first day of the second quarter?

    Learn about the fiscal year of different companies and when the second quarter begins. Explore why analysts often prefer to compare results year-over-year.

You May Also Like

Hot Definitions
  1. Christmas Island Dollar

    The former currency of Christmas Island, an Australian island in the Indian Ocean that was discovered on December 25, 1643. ...
  2. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  3. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  4. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  5. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  6. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
Trading Center