How to Account for Unrealized Assets

by Steve Gregory, studioD

Many businesses invest some of their income in the stock market or other types of investments as a part of their business strategy. If the investment increases in value over time but is not sold it is described as an unrealized gain. Keeping track of unrealized assets, especially in the stock market, is important for companies so that they can estimate their capital gains taxes when they decide to sell their assets. An unrealized asset is recorded on a company's balance sheet as "accumulated other comprehensive income."

Calculate the initial value of all investments made by the company. Include all assets, including stocks, foreign currency purchases and bonds. Other assets that can have an unrealized gain, such as real estate, should also be included.

Find the current value of all the company's assets. For example, the company's stockbroker, CFO or accountant can give a detailed breakdown of all the company's investments and their current value.

Subtract the initial value of all assets from their current value to determine the unrealized gain.

Record this value in the accumulated other comprehensive income section of the company's balance sheet to create a permanent record of the value of the unrealized assets.

About the Author

An avid technology enthusiast, Steve Gregory has been writing professionally since 2002. With more than 10 years of experience as a network administrator, Gregory holds an Information Management certificate from the University of Maryland and is pursuing MCSE certification. His work has appeared in numerous online publications, including Chron and GlobalPost.

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