Unrealized Investment Gains

Unrealized gains - confusing to a rookie

Unrealized gains - confusing to a rookie

A redemption of mutual funds has me confused about Journal entries. Prior to redemption I had:


Mutual Fund Investments 80,888 DR
Mutual Funds Unrealized Gains 8,781 DR
(calculated as of end of prior year)


We sold, and realized $93,770

So my journal entries seem to be:

Checking account 93,770 DR
Mutual Fund Investments 80,888 CR
Gain on sale of assets 12,882 CR

Question: What happens to that Unrealized Gain asset amount that is sort of just left hanging out there? If I Credit it out, what is the corresponding Debit entry?



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You should be able to go into your General Ledger and open up the year-end entry that was booked for unrealized gains. When you open the entry, you should be able to see your offsetting entry. As it appears you have sold all of your investment, you would reverse the year-end entry to bring the account to a nil balance as at the date of the sale do the mutual funds.

You should check/verify your adjusted cost base to ensure it includes reinvested dividends, commissions on sale of funds, etc. You can find more information on adjusted cost base on the CRA website.

Reporting capital gains> Shares, funds and other units: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/127/shrs/menu-eng.html

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