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General Accounting Discussions: Balance Sheet-Investment Securities-Long Term Investments

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  1.  
    • CommentAuthormays4me
    • CommentTimeMar 11th 2008
     
    If my totals from a Balance Sheet are: Current Assets-350,000; Long Term Assets-800,000; Current Liabilities- 240,000; Long Term Liabilities- 270,000

    and I had addition information as in:
    Investment securities totaling $27,000 are included in Current Assets. Theses secrurities represent stock purchases made as a long-term investment in a major supplier

    I know that Investment securities are to go into Current Assest, but long term investments dont...should this stay the same or do I take out of Current Assets and move it into Investments?
  2.  
    you must first determined wheather it is a temporary investment or not. if it does then, it should stay in your current asset. In order for an investment to be classified as temporary, it must meet both of the following condition:

    1. it must be readily marketable.
    2. it must be intended for conversion into cash within 1 year or the operating cycle ( whichever is longer).

    readily marketable means that the item can easily be sold. If the stock is not publicly held, thus making it difficult to sell. If this is the case, condition 1 has not bee met and the stock is not classsified as a temporary investment.

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