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.