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LSDefine
Simple English definitions for legal terms
unrealized profit
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A quick definition of unrealized profit:
Unrealized profit is a type of profit that has not yet been earned or received. It is also called paper profit because it is only anticipated and not yet realized. For example, if you own stocks that have increased in value but you have not sold them yet, the profit you would make from selling them is unrealized. It is important to note that unrealized profit is not the same as actual profit, which is the money you have earned after all expenses have been paid.
A more thorough explanation:
Unrealized profit refers to a profit that has not yet been earned or received. It is also known as paper profit. This means that the profit is only anticipated but has not yet been realized. For example, if you own stocks that have increased in value, the profit you would make by selling those stocks at a higher price than you bought them for is an unrealized profit until you actually sell them.
Unrealized profit is different from realized profit, which is the profit that has been earned and received. For instance, if you sell those stocks at a higher price than you bought them for, the profit you make is a realized profit.
Another example of unrealized profit is when a company has assets that have increased in value but have not yet been sold. The increase in value is considered an unrealized profit until the assets are sold and the profit is realized.