holding gain

In accounting, "holding gain" refers to an increase in the market value of an asset that is not immediately reflected in financial statements. For example, if the value of a company's land increases due to external factors like a new expressway, this gain isn't recorded until the land is sold. Similarly, if the wholesale price of inventory rises, the increase in value before sale is considered a holding gain.1

Accounting methods like Last-In, First-Out (LIFO) for inventory can prevent the recognition of these gains in net income, as they are considered less "real" than gains from actual sales. Conventional accounting statements are also criticized for not always accounting for changes in the purchasing power of money due to inflation. Developing ways to value "soft" assets like brand image and to express forward-looking information are ongoing challenges in financial accounting.1