Paper Profit

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An increase in value above original cost or basis that would be realized if the property were sold; however, the property is not offered for sale.


Example: Phyllis purchased a tract of land for $100,000 that was recently appraised at $150,000. Her paper profit is $50,000.

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unrealized gain from holding an item while its market value has increased. The amount equals the difference between the current market price and the initial cost. Examples are appreciation in value of inventory or securities. Paper profits are realized profits at the time of sale, at which point income statement recognition is given to them.

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