Unrealized Loss Law and Legal Definition

Unrealized loss is a loss that results from holding onto an asset rather than cashing it in and officially taking the loss. This term commonly refers to the write-down of an investment portfolio resulting from applying the lower of cost or market value on an aggregate basis. On a short-term portfolio, the unrealized loss is shown on the income statement. On a long-term portfolio, the unrealized loss is presented as a separate item in the stockholders equity section of the balance sheet.