Change in value of an asset that is still being held. It is distinguished from a Realized Gain, Loss on the sale of the asset. The term commonly refers to the write-down or write-up of an investment portfolio of trading or available-for-sale securities resulting from applying the market value method on an aggregate basis. On a trading securities portfolio, the unrealized loss or gain is shown on the income statement. On an available-for-sale securities portfolio, the total unrealized loss or gain is presented as a separate item under "Accumulated Other Comprehensive Income" in the stockholders' equity section of the balance sheet. Assume on 12/31/2004 a trading securities portfolio has a cost of $100,000 and a market value of $88,000. The entry is:
Unrealized loss 12,000 Allowance 12,000
If on 12/31/2005, the trading securities portfolio in market value goes to $93,000 from $88,000, the entry is:
Allowance 5000 Unrealized gain 5000
