Realized Gain

What is a 'Realized Gain'

A realized gain is a gain resulting from selling an asset at a price higher than the original purchase price. Realized gain occurs when an asset is disbursed at a level that exceeds its cost of book value. While an asset may be carried on a balance sheet at a level far above cost, any gains while the asset is still being held would be considered unrealized, as the asset is only being valued at a fair market value.

BREAKING DOWN 'Realized Gain'

Once an asset that is being held on the books at an unrealized gain is sold for a realized profit, a firm will predictably see an increase in its current assets and a gain from sale. Such a gain may lead to an increased tax burden, since realized gains from sales are typically taxable income. This is one drawback of turning an unrealized "paper" gain into a realized gain.

RELATED TERMS
  1. Realized Loss

    A loss is recognized when assets are sold for a price lower than ...
  2. Unrealized Gain

    A profit that exists on paper, resulting from any type of investment. ...
  3. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  4. Gain

    An increase in the value of an asset or property. A gain arises ...
  5. Unrealized Loss

    A loss that results from holding onto an asset after it has decreased ...
  6. Return On Capital Gains

    The return that one gets from an increase in the value of a capital ...
Related Articles
  1. Investing Basics

    Explaining Unrealized Gain

    An unrealized gain occurs when the current price of a security exceeds the price an investor paid for the security.
  2. Investing Basics

    Understanding the Capital Gains Tax

    A capital gains tax is imposed on the profits realized when an investor or corporation sells an asset for a higher price than its purchase price.
  3. Professionals

    Balance Sheet Components - Marketable & Nonmarketable Instruments

    CFA Level 1 - Balance Sheet Components - Liabilities. Learn about the different types of liabilities. A top down approach into the components of long-term and current liabilities.
  4. Term

    What's Accumulated Other Comprehensive Income?

    Accumulated other comprehensive income lists gains and losses a firm has yet to settle.
  5. Economics

    Calculating Net Realizable Value

    An asset’s net realizable value is the amount a company should expect to receive once it sells or disposes of that asset, minus costs from its disposal.
  6. Savings

    Assessing Bank Assets: Are Your Savings Safe?

    Learn how to determine if your assets are safe or if your bank has spread itself too thin.
  7. Economics

    Understanding Carrying Value

    Carrying value is the value of an asset as listed on a company’s balance sheet. Carrying value is the same as book value.
  8. Professionals

    Balance Sheet Components - Assets

    CFA Level 1 - Balance Sheet Components - Assets. Learn about the different types of assets. A top down approach into the components of long-term and current assets.
  9. Investing

    Understanding Capital Gains

    Capital gain refers to the increase in value of a capital asset or an investment security upon sale. In other words, if you buy company stock, real estate or fine art and then sell it for more ...
  10. Fundamental Analysis

    The Market Value Versus Book Value

    Understanding the difference between book value and market value is a simple yet fundamentally critical component to analyze a company for investment.
RELATED FAQS
  1. What are unrealized gains and losses?

    An unrealized loss occurs when a stock decreases after an investor buys it, but he or she has yet to sell it. If a large ... Read Answer >>
  2. 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, ... Read Answer >>
  3. What is the difference between carrying value and fair value?

    Learn about the carrying value and fair value of assets and liabilities, what the carrying and fair value measure and the ... Read Answer >>
  4. What is the difference between carrying value and market value?

    Understand the difference between carrying value and market value. Learn when a company uses carrying value to value an asset ... Read Answer >>
  5. How do you write off impaired assets from the financial statement?

    Learn what an impaired asset is and how it effects a company's financial statements. Understand how an accountant writes ... Read Answer >>
  6. What is the difference between book value and carrying value

    Dig deeper into the definitions of carrying value and book value, and learn to differentiate between their various financial ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center