BROWSE

Realized Gain

What is a 'Realized Gain'

A realized gain results from selling an asset at a price higher than the original purchase price. It occurs when an asset is sold at a level that exceeds its book value cost. 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 are considered unrealized as the asset is only being valued at fair market value.

Explaining 'Realized Gain'

Unrealized gains and realized gains vary considerably. An unrealized gain most often refers to a gain reported on a company’s financial statements and will appreciate the value of the specified asset on a company’s books. Unrealized gains are typically not taxed. They add to an asset’s originally reported book value at the time of purchase and can occur on all types of assets and investments held by a company.

Balance Sheet Elimination

The sale of an asset takes place when a company chooses to eliminate it from the balance sheet. Asset sales can occur for various reasons and purposes and are reported on the financial statements of a company during the period in which the asset sale takes place. Asset sales are regularly monitored to ensure the asset is sold at a fair market value or arm’s length price. This regulation ensures companies are valuing the sale appropriately in the marketplace and takes into consideration whether the asset is sold to a related or unrelated party.


Further Reading


The economic value of volatility timing using “realized” volatility
www.sciencedirect.com [PDF]
… While around 15% of all gains were realized, only 10% of all losses are realized. This hesitancy to realize gains came at a cost … Moreover, everyone who is saving a positive amount should participate in this program for the infra-marginal gain …

Fundamental issues related to using fair value accounting for financial reportingFundamental issues related to using fair value accounting for financial reporting
search.proquest.com [PDF]
… While around 15% of all gains were realized, only 10% of all losses are realized. This hesitancy to realize gains came at a cost … Moreover, everyone who is saving a positive amount should participate in this program for the infra-marginal gain …

Is economic policy uncertainty important to forecast the realized volatility of crude oil futures?Is economic policy uncertainty important to forecast the realized volatility of crude oil futures?
www.tandfonline.com [PDF]
… While around 15% of all gains were realized, only 10% of all losses are realized. This hesitancy to realize gains came at a cost … Moreover, everyone who is saving a positive amount should participate in this program for the infra-marginal gain …

Measuring the financial sophistication of householdsMeasuring the financial sophistication of households
pubs.aeaweb.org [PDF]
… While around 15% of all gains were realized, only 10% of all losses are realized. This hesitancy to realize gains came at a cost … Moreover, everyone who is saving a positive amount should participate in this program for the infra-marginal gain …

Microstructure noise, realized variance, and optimal samplingMicrostructure noise, realized variance, and optimal sampling
academic.oup.com [PDF]
… While around 15% of all gains were realized, only 10% of all losses are realized. This hesitancy to realize gains came at a cost … Moreover, everyone who is saving a positive amount should participate in this program for the infra-marginal gain …

A pure financial rationale for the conglomerate mergerA pure financial rationale for the conglomerate merger
www.jstor.org [PDF]
… While around 15% of all gains were realized, only 10% of all losses are realized. This hesitancy to realize gains came at a cost … Moreover, everyone who is saving a positive amount should participate in this program for the infra-marginal gain …

Do investor sophistication and trading experience eliminate behavioral biases in financial markets?Do investor sophistication and trading experience eliminate behavioral biases in financial markets?
academic.oup.com [PDF]
… While around 15% of all gains were realized, only 10% of all losses are realized. This hesitancy to realize gains came at a cost … Moreover, everyone who is saving a positive amount should participate in this program for the infra-marginal gain …

Realized volatility transmission from crude oil to equity sectors: A study with economic significance analysisRealized volatility transmission from crude oil to equity sectors: A study with economic significance analysis
www.sciencedirect.com [PDF]
… While around 15% of all gains were realized, only 10% of all losses are realized. This hesitancy to realize gains came at a cost … Moreover, everyone who is saving a positive amount should participate in this program for the infra-marginal gain …



Q&A About Realized Gain


How do you monitor sales of assets to ensure they are sold at fair market value or arms length price?

You monitor sales to ensure they are sold at fair market value or arms length price by ensuring they are valued appropriately in the marketplace and taking into consideration whether they were sold to related or unrelated parties.

When does an unrealized gain occur?

An unrealized gain occurs when the sale of an asset takes place while it is still being held by the company.

What is a realized gain?

A realized gain results from selling an asset at a price higher than the original purchase price.

When does a realized gain occur?

A realized gain occurs when an asset is sold at a level that exceeds its book value cost.

What are some reasons for selling assets?

Some reasons for selling assets include eliminating them from the balance sheet, raising cash, and making strategic business decisions.

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