Re: What is Long Term Investment?

Tue Jan 08, 2019 2:49 pm

f an entity intends to keep an investment until it has matured

Tue Jan 08, 2019 2:49 pm

A long-term investment is found on the asset side of a company's balance sheet

Tue Jan 08, 2019 2:50 pm

the company can demonstrate the ability to do so,

Tue Jan 08, 2019 2:50 pm

When a firm purchases shares of stock or another company's debt as investments

Tue Jan 08, 2019 2:50 pm

the investment is noted as being "held to maturity."

Tue Jan 08, 2019 2:50 pm

determining whether to classify it as short-term or long-term affects the way those assets are valued on the balance sheet.

Tue Jan 08, 2019 2:50 pm

The investment is recorded at cost

Tue Jan 08, 2019 2:50 pm

Short-term investments are marked-to-market, and any declines in their value

Tue Jan 08, 2019 2:50 pm

although any premiums or discounts are amortized over the life of the investment.

Tue Jan 08, 2019 2:50 pm

Long-Term Investing for Individuals

Tue Jan 08, 2019 2:51 pm

The long-term investment may be written down to properly reflect an impaired value.

Tue Jan 08, 2019 2:51 pm

However, there may not be any adjustment for temporary market fluctuations.

Tue Jan 08, 2019 2:51 pm

Because investments must have an end date,

Tue Jan 08, 2019 2:51 pm

equity securities may be not be classified as held to maturity.

Tue Jan 08, 2019 2:51 pm

Investments held with the intention of resale for a short-term profit are classified as current investments.

Tue Jan 08, 2019 2:52 pm

A trading investment may not be a long-term investment.

Tue Jan 08, 2019 2:52 pm

However, a company may hold an investment with the intention to sell in the future.

Tue Jan 08, 2019 2:52 pm

These investments are classified as "available for sale" as long as the anticipated sale date is not within the next 12 months.

Tue Jan 08, 2019 2:52 pm

Available for sale long-term investments are recorded at cost when purchased

Tue Jan 08, 2019 2:53 pm

subsequently adjusted to reflect their fair values at the end of the reporting period.

Tue Jan 08, 2019 2:53 pm

until the long-term investment has been sold.