What is a long-term investment?

Long-term investment refers to the foreign investment that the enterprise is not ready to realize at any time and holds for more than 1 year. The reason why long-term investment is different from short-term investment lies not only in the length of investment period, but also in the difference of investment purpose. The purpose of long-term investment obtained by enterprise management is to hold rather than sell, which is an important difference from short-term investment.

Classification:

According to its nature, long-term investment can be divided into long-term stock investment, long-term bond investment and other long-term investments.

Long-term stock investment is to buy and hold common shares and preferred shares of other companies. When it is obtained in cash, it is based on the estimated cost (including purchase price, commission and tax, etc.) at the time of acquisition. ); If it is obtained by non-cash transaction, it shall be priced according to the fair market price of the traded goods or the obtained stocks.

Long-term debt investment refers to the purchase of bonds and other debt investments that cannot be realized or will not be realized at any time within one year (excluding one year). The characteristics of bond investment: 1, which can not only recover the investment principal, but also obtain interest income on schedule; 2. Income has nothing to do with the operating conditions of the invested enterprise; 3. Investment enterprises have no right to participate in enterprise management. Bond investment risk is small, and the economic benefits obtained are relatively small, so it is generally not responsible.

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