Realizable value

Written by Fmi.Online Monday November 14, 2022
Realizable value is the net amount of money that you will get from selling one of your assets. In other words, realizable value is equal to the sale price of an asset less any applicable fees. Notice this has nothing to do with the fair market value of the asset being sold.


This concept can also be applied to loans. In this case, it means the amount of money a lender expects to collect from his borrower. Most companies use some form of credit. Some companies have credit with vendors in the form of accounts payable while other companies have credit with customers in the form of accounts receivable. These lines of credit or borrowings are record on the books at their actual amount.

In a nutshell: 

  • Amount realized is the total amount received from a sale transaction.
  • It encompasses all forms of compensation, including cash, the FMV of any property received, and any liabilities that the purchaser assumes as a result of the transaction.
  • It also factors in selling expenses, such as redemption fees, advertising and legal fees, commissions, and exit charges.
  • Amount realized is used to calculate realized taxable gains and losses.
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