Definition of Realized Gains and Losses

Realized Gains and Losses

Increases or decreases in the fair value of an asset or a liability that
are realized through sale or settlement.

Capital gains yield

The price change portion of a stock's return.

Net operating losses

losses that a firm can take advantage of to reduce taxes.

Realized compound yield

Yield assuming that coupon payments are invested at the going market interest
rate at the time of their receipt and rolled over until the bond matures.

Realized return

The return that is actually earned over a given time period.

Residual losses

Lost wealth of the shareholders due to divergent behavior of the managers.

extraordinary gains and losses

No pun intended, but these types of gains
and losses are extraordinarily important to understand. These are nonrecurring,
onetime, unusual, nonoperating gains or losses that are
recorded by a business during the period. The amount of each of these
gains or losses, net of the income tax effect, is reported separately in the
income statement. Net income is reported before and after these gains
and losses. These gains and losses should not be recorded very often, but
in fact many businesses record them every other year or so, causing
much consternation to investors. In addition to evaluating the regular
stream of sales and expenses that produce operating profit, investors
also have to factor into their profit performance analysis the perturbations
of these irregular gains and losses reported by a business.

realized value approach

a method of accounting for byproducts or scrap that does not recognize any value for these products until they are sold; the value recognized
upon sale can be treated as other revenue or other income

Capitalized Cost An expenditure or accrual that is reported as an asset to be amortized against

future-period revenue.

Realized Revenue

A revenue transaction where goods and services are exchanged for cash or
claims to cash.

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