when there are unrealized gains present it usually means an investor believes the investment has room for higher future gains otherwise they would sell now and recognize the current gain 
recording unrealized gainsunrealized gains are recorded differently depending on the type of security securities that are held to maturity are not recorded in financial statements but the company may decide to include a disclosure about them in the footnotes of its financial statements securities that are held for trading are recorded on the balance sheet at their fair value and the unrealized gains and losses are recorded on the income statement the increase or decrease in the fair value of held for trading securities impacts the company s net income and its earnings per share eps securities that are available for sale are also recorded on a company s balance sheet as an asset at fair value however the unrealized gains and losses are recorded in comprehensive income on the balance sheet unrealized gain vs unrealized lossthe opposite of an unrealized gain is an unrealized loss this type of loss occurs when an investor holds onto a losing investment such as a stock that has dropped in value since the position was opened similar to an unrealized gain a loss becomes realized once the position is closed at a loss unrealized gains and unrealized losses are often called paper profits or losses since the actual gain or loss is not determined until the position is closed a position with an unrealized gain may eventually turn into a position with an unrealized loss as the market fluctuates and vice versa example of an unrealized gainif an investor purchased 100 shares of stock in abc company at 10 per share and the fair value of the shares subsequently rises to 12 per share the unrealized gain on the shares still in their possession would be 200 2 per share x 100 shares if the investor eventually sells the shares when the trading price is 14 they will have a realized gain of 400 4 per share x 100 shares 