Long Term Investments

Long term investment is an account on the asset side of a company's balance sheet that represents the investments that a company intends to hold for more than a year. They can consist of stocks and bonds of other companies, real estate, and cash that has been set aside for a specific purpose or project.  In addition to investments a company plans to hold for an extended period of time, Long Term Investments also consist of the stock in a company's affiliates and subsidiaries. A common form of this type of investing occurs when company A invests largely in company B and gains significant influence over company B without having a majority of the voting shares. In this case, the purchase price would be shown as a long-term investment. The difference between Short Term and Long Term investments lie in the company's motive for owning them.  Short term investments consist of stocks, bonds, etc. a company has bought and will sell shortly.  The investments made under long term investments may never be sold. 

When a business purchases common stocks as an investment, they will go into either the Short Term or Long Term Investment categories on the balance sheet depending on the intent of purchase.  These are normally carried on the balance sheet at cost or market value (whichever is less).

Often referred to simply as "investments". Long-term investments are to be held for many years and usually consists of four types of investments:

Investments in securities, such as bonds, common stock, or long-term notes.

Investments in fixed assets not used in operations (e.g., land held for sale).

Investments in special funds (e.g., sinking funds or pension funds).

Different forms of insurance may also be treated as long term investments.