Definition
The financial accounting term long term investments is defined as those investments owned by the company, with the intention to hold onto these assets for many years. Long term investments appear as an asset on the company's balance sheet.
Explanation
Long-term investments are usually shown on the balance sheet immediately following current assets. Even though the intention is to hold onto these investments for longer than 12 months, they are still considered a relatively liquid asset.
Long term investments that appear on the balance sheet are usually one of three types:
Tangible Fixed Assets: plant, property and equipment that are not currently used in operations, such as land or real estate purchases to be resold.
Securities: including common stock, bonds, or long term notes.
Investment Funds: including pension funds and other monies set aside for employees' retirement.
Long term investments are typically recorded on the balance sheet at market value or cost, whichever is lower.
Related Terms
Also known as a statement of financial position, the balance sheet is used to show the financial health of a company at a particular point in time. The balance sheet consists of assets, liabilities, and owner's equity in the company. It is one of the four key financial statements issued by public companies.
Moneyzine EditorJanuary 8th, 2024
The accounting term used to describe an economic resource, which is owned by the corporation and expected to provide future benefits to its operation, is asset. Appearing on the balance sheet, assets are typically broken down into two categories:Moneyzine EditorJanuary 5th, 2024
The financial accounting term marketable security is used to describe both debt and equity securities held by a company. Marketable securities is a subset of short term investments, as such it appears on the company's balance sheet as a current asset.Moneyzine EditorFebruary 8th, 2024- The financial accounting term property, plant, and equipment is used to describe assets of a long lasting nature, which are used in the normal operation of the company. The most common types of property, plant, and equipment are land, buildings, and machinery.Moneyzine EditorSeptember 21st, 2023
- The financial accounting term short-term investments refers to securities the company has purchased that can, and will be, sold in less than twelve months. Also known as temporary investments, short-term investments typically include marketable equity and debt securities as well as short-term paper.Moneyzine EditorSeptember 21st, 2023
