A common example of an unrealized gain is the gain in the market value of an investment in the stock of another corporation that is held as an available-for-sale security.

The unrealized holding gain is reported on the balance sheet by 1) increasing the asset available-for-sale securities, and 2) increasing the stockholders’ equity component accumulated other comprehensive income.  Note that the holding gains on available-for-sale securities are not reported on the income statement.

Learn more about unrealized gains and other comprehensive income at www.FASB.org/st.

About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

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