15 Lecture - Long Term Investments, Presentation and Disclosure

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15 Lecture

MGT401

Midterm & Final Term Short Notes

Long Term Investments, Presentation and Disclosure

Long-term investments are assets held by a company for a period exceeding one year, and their presentation and disclosure in financial statements are crucial to provide transparency to stakeholders. These investments should be categorized as eit


Important Mcq's
Midterm & Finalterm Prepration
Past papers included

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  1. Long-term investments are assets held by a company for a period exceeding: a) 6 months b) 1 year c) 2 years d) 5 years Answer: b) 1 year

  2. Marketable securities are categorized as: a) Short-term investments b) Long-term investments c) Non-marketable securities d) Both a and c Answer: b) Long-term investments

  3. Non-marketable securities include: a) Stocks b) Bonds c) Loans to other companies d) Both a and b Answer: c) Loans to other companies

  4. Long-term investments should be presented in the balance sheet after: a) Current assets b) Non-current assets c) Equity d) Liabilities Answer: b) Non-current assets

  5. The value of long-term investments should be disclosed in the: a) Income statement b) Cash flow statement c) Balance sheet d) Statement of retained earnings Answer: c) Balance sheet

  6. Any restrictions on the use of long-term investments should be disclosed in the: a) Income statement b) Cash flow statement c) Balance sheet d) Notes to financial statements Answer: d) Notes to financial statements

  7. The purpose and risks associated with long-term investments should be included in the: a) Income statement b) Cash flow statement c) Balance sheet d) Notes to financial statements Answer: d) Notes to financial statements

  8. Long-term investments should be categorized as either: a) Marketable or non-marketable b) Current or non-current c) Cash or non-cash d) Both a and b Answer: a) Marketable or non-marketable

  9. The disclosure of significant estimates or judgments made in determining the value of long-term investments is important to: a) Provide transparency to stakeholders b) Meet regulatory requirements c) Enhance the company's image d) All of the above Answer: a) Provide transparency to stakeholders

  10. Proper presentation and disclosure of long-term investments is important to: a) Improve investor confidence b) Attract financing c) Both a and b d) None of the above Answer: c) Both a and b



Subjective Short Notes
Midterm & Finalterm Prepration
Past papers included

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  1. What is the definition of long-term investments? Answer: Long-term investments are assets held by a company for a period exceeding one year.

  2. How are marketable securities categorized? Answer: Marketable securities are categorized as long-term investments.

  3. What are non-marketable securities? Answer: Non-marketable securities include loans to other companies or affiliates.

  4. Where should long-term investments be presented in the balance sheet? Answer: Long-term investments should be presented in the non-current assets section of the balance sheet.

  5. What should be disclosed regarding the value of long-term investments? Answer: The value of long-term investments should be disclosed in the balance sheet, along with any significant estimates or judgments made in determining their value.

  6. What should be disclosed regarding the use of long-term investments? Answer: Any restrictions on the use of long-term investments should be disclosed in the notes to the financial statements.

  7. Why is it important to include the purpose and risks associated with long-term investments in the notes to the financial statements? Answer: It is important to include the purpose and risks associated with long-term investments in the notes to the financial statements to provide stakeholders with a better understanding of the company's investment strategy and potential risks.

  8. What is the difference between marketable and non-marketable securities? Answer: Marketable securities can be easily sold or traded, while non-marketable securities cannot.

  9. What is the significance of disclosing significant estimates or judgments made in determining the value of long-term investments? Answer: Disclosing significant estimates or judgments made in determining the value of long-term investments is important to provide transparency to stakeholders.

  10. Why is proper presentation and disclosure of long-term investments important for a company? Answer: Proper presentation and disclosure of long-term investments is important for a company to improve investor confidence and attract financing.

Long-term investments are assets that a company intends to hold for more than one year. They are typically securities, such as stocks, bonds, or other investment funds. Long-term investments can provide companies with potential capital gains or income from dividends, but they also come with risks. It is important for companies to present and disclose their long-term investments accurately in their financial statements to provide stakeholders with a clear understanding of the company's investment strategy and potential risks. Long-term investments are typically presented in the non-current assets section of the balance sheet. The balance sheet should include the total value of the long-term investments, along with any significant estimates or judgments made in determining their value. This can include the use of a fair value hierarchy or an assessment of market risk. In addition to the presentation of long-term investments in the balance sheet, companies should also disclose relevant information about the investments in the notes to the financial statements. This can include the purpose of the investment, such as whether it is for strategic or financial reasons, and any restrictions on the use of the investment. It is also important to disclose any significant risks associated with the long-term investments, such as market risks or liquidity risks. Proper presentation and disclosure of long-term investments can help to improve investor confidence and attract financing. It provides stakeholders with a better understanding of the company's investment strategy and potential risks. Additionally, transparency in financial reporting can help to prevent fraudulent activity and promote ethical business practices.

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