Question

Delgado Corp. purchased some common stock of Keller Enterprises. Delgado plans to hold this stock for a minimum of five years, although they could sell it sooner if they need to. How do you expect Delgado to classify the stock on their balance sheet?

Answer 1

Answer:

Delgado will classify the stock on his balance sheet as a long term investment.

Explanation:

A long term investment is an asset owned by a company and which it hopes to keep for more then a year.

Long term investments are recorded on the asset side of balance sheets and they can be in form of land, bonds, stocks, machinery, and so on.

The opposite of long term investment is short term investment where an asset is kept for less than a year.