Realized Gain
The profit recognized when selling an asset for more than its book value or cost basis, becoming recognized in financial statements only upon completion of the transaction.
Realized Gain
The profit that occurs when selling an asset for more than its book value or cost basis, recognized in financial statements only when the transaction is completed.
For example, if a company sells a building that cost $500,000 for $700,000, it would record a realized gain of $200,000. Similarly, an investor who purchased stock for $10,000 and sells it for $15,000 has realized a gain of $5,000 at the time of sale.
Realized gains differ from unrealized (or “paper”) gains, which represent appreciation in value before a sale occurs. For financial reporting, realized gains from normal business activities appear on the income statement, typically as non-operating income if not part of core operations. The timing of gain realization affects tax obligations and can be strategically managed, especially for investment assets where capital gains tax rates may apply.