Gains are the result of circumstances, events, or transactions which affect the entity independent of revenue or owner investments.
In common usage,[3] a gain or loss is realized when the underlying asset or liability is converted to cash.
For example, if a share of stock is bought on the market for 100 and later sold for 120, the gain of 20 is realized.
Accounting standards such as IFRS and US GAAP differentiate realized from unrealized in a somewhat different way.
For example, under US GAAP (US Generally Accepted Accounting Principles) a gain or loss is “realized” when the market value of an investment is designated to be held for trading, and such investment value increases or decreases: in this case the gain or the loss in question is reported in an income statement account.