The loss in value that results from holding an asset over a period of time. It arises when the value of an asset decreases over time, and as such it relates to retaining ownership of it. For a liability, it is the increase in value that results in losses accruing to the owner over time.

Generally speaking, positive or negative holding losses (positive gains are holding gains) 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 marketable securities many months back at $100,000 and their current market price stands at $80,000. The difference (holding losses of $20,000) cannot be recorded on its financial records because the entity didn’t sell the assets to realize these gains. However, once the sale takes place at the current price, the entity can recognize a loss of $20,000 on its statement of income (after having removed the original cost of $100,000).

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

Holding losses are also known as capital losses.