The gain in value that is generated by holding an asset over a period of time. It arises when the value of an asset increases over time, and as such it relates to retaining ownership of it. For a liability, it is the decrease in value that results in gains accruing to the owner over time. Holding gains on a liability can be attributed to unanticipated inflation and changes in credit risk.

Generally speaking, positive or negative holding gains (negative gains are holding losses) may accrue during the reporting period on financial and non-financial assets and liabilities purely due to changes in their prices.

An examples is the case when a entity that purchased a plot of land for $50,000 five years ago and today it still holds the land whose current price is $120,000. The difference (holding gains of $70,000) cannot be recorded on its financial records because the entity didn’t sell it to realize these gains. However, once the sale takes place at the current price, the entity can recognize a gain of $70,000 on its statement of income (after having removed the original cost of $50,000).

Holding gains are not treated as actually realized gains under accounting practices because such a treatment defies the revenue recognition principle and the cost principle.

Holding gains are also known as capital gains.