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deering wholesale supply owns stock in orr corporation. Deering intends to hold the stock indefinitely because...

deering wholesale supply owns stock in orr corporation. Deering intends to hold the stock indefinitely because of some negative tax consequences if sold. Shoud the investment in orr be classified as a short-term investment?

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Answer #1

Short term investments are usually investments which are helf for less than one year time. They can be easlity converted to cash hence shown after cash and cash equivalent.  As Deering wholesale supply is holding securities in Orr corporation for indefinite period of time it should be considered a long term investment. Long term investments are investments which are held by company for more than a year ot time.

Long term investments are shown on Balance sheet under the head Non current Assets whereass Short term investments are shown under the balance sheet under the head current asset.

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