Long-Term Investments

Category

Balance Sheet

Units

Currency

US-GAAP elements

LongTermInvestmentsEquityMethodInvestmentsMarketableSecuritiesNoncurrent

Reference

Regulation S-X Rule 5-02.12 (Other investments); ASC 320, ASC 321, and ASC 323

Source

Reported in SEC EDGAR filings (US-GAAP XBRL taxonomy)

Long-term investments are financial assets a company intends to hold for longer than one year or its operating cycle. They include debt securities with later maturities, stakes in other companies, investments accounted for by the equity method, and similar holdings that are not expected to be turned into cash in the near term.

They are reported as noncurrent assets. Securities the company plans to sell within a year, or that mature within a year, are classified as short-term investments instead, and cash equivalents are reported separately.

How a long-term investment is measured depends on what it is. Debt securities fall under ASC 320 and are carried at fair value or, if held to maturity, at amortized cost. Equity securities without significant influence fall under ASC 321 and are generally carried at fair value with changes in earnings. Investments that give the company significant influence, often a 20 to 50 percent stake, use the equity method under ASC 323: they start at cost and are then adjusted for the investor's share of the investee's earnings and dividends. In XBRL filings the total is tagged LongTermInvestments, with EquityMethodInvestments and MarketableSecuritiesNoncurrent used for those components.

Regulation S-X Rule 5-02.12 covers other investments. It defers to GAAP for noncurrent marketable equity securities and requires, for other investments, a statement of the basis used for the balance-sheet amount along with the alternative of cost or market value. Investments in related parties are reported under a separate caption, Rule 5-02.10.

Analysts treat long-term investments differently depending on their nature. Large portfolios of high-grade debt securities at some technology companies are close to cash and are sometimes added to it when assessing liquidity or enterprise value. Equity-method stakes, by contrast, reflect strategic holdings whose book value can differ widely from market value, and whose earnings flow into the income statement without matching cash. Reading the investments footnote shows which kind a company holds.