LONG-TERM INVESTMENTS AND OTHER ASSETS

A.    Long Term Investments

Long-term investments are planting some property of a company in another company in order to obtain a fixed income and or to master or control the company.

Shelf-term investments can be:

1. Inclusion in the form of shares, obigasi, and other securities.
2. Funds to pay off long-term debt, or other special funds.
3. Other assets, such as the purchase of land use plans in the future.

There are several types of investments that can be evidenced by certificates or other similar documents. The nature of an investment Dapa tberupa debt, other than short-term debt or commercial debt, or equity instruments. In general have the right financial investment, such as intangible investment land, buildings, gold, diamond, or other commodities that can dipasarkan.Untuk some kind of investment, there is an active market that can shape the market value. For this type of investment is used as an indicator of market value determination of fair value.

As for the investment that has no active market, other means are used to determine the value of basic wajar.Atas throughout the above description it can finally be concluded that the nature of long-term investments are:

a.    Part of the assets of the company,

b.    On the basis of embedded throughout the above description it can eventually concluded that long-term nature of investments are:
a) Part of the company's assets,
b) Implanted in some form,
c) Intended for profit / increase wealth or for other purposes.
d) Within a period of more than one year.

Long-Term Investment Objective:

1.      To obtain a fixed income in each period, such as interest, royalties, dividends, or rents, and others.

2.      To establish a special fund, for example, funding for the expansion of interest, social interest.

3.      To control or control of another company, through its majority ownership of the company's equity.

4.      To ensure the availability of raw materials and a market for the products produced.

5.      To reduce competition among similar companies.

6.      To maintain the relationship between the companies.

Forms of Long-Term Investments

There are many options for companies to establish long-term investments. There are companies who choose to invest in land or buildings (not for the operation of the company) is called with property investment. There also are choosing an investment in savings or time deposits, or other investment options, namely the purchase of stocks or bonds.

Long-term investments can be made firm in the form of bonds or stock. When compared, the two forms of investment has advantages and disadvantages. Long-term investments in bonds to give a definite assurance of the acceptance rate for a certain period. If the interest rate on the market declined, interest rates have not changed since the interest rate is specified in the initial agreement. On the other hand, long-term investment in stocks will provide higher income than interest rates, if the company gets high returns and vice versa.

B. Investment in Shares

Investment in shares is the purchase / investment / ownership of other companies in order to earn income in the form of dividends. Other advantages can include management control, namely the right to determine the policy of the company 'bought. Management control is obtained if a majority shareholding to achieve goals. Equity investment firm which is called the parent company, the company that issued the stock while the company called the child, the two so-called affiliated companies.

C. Investments in Bonds

Bonds is a letter of loan money will be repaid after a certain period of time. Bonds generally provide a fixed amount of interest income to investors. Sometimes bonds also have a right to benefit sharing. If accepted by the bondholders in the form of, with rekarakterisasoi as dividends, the profits it received no tax dikenakkan. However, the payer and the direkarakterisasi as a dividend is not a cost-reducing revenue.

Because at the time of maturity, the bonds will be paid (returned) number of par, premium bond is a loss for investors and vice versa discount as income. The opposite applies to the company issuing the bond. In commercial accounting practices, with the premium and discount (discount) bond, investors are effectively earning interest that is different from the nominal interest rate. It requires the calculation of effective interest amortization of premium and discount as a correction to the book value of bonds.

Aimed at obtaining fixed rate each year during the investment period. Walking & Amortization Interest Adjustment:

·         Journal of adjustments to the interest which has not been received if the date is not exact interest rate on the date the end of accounting period

·         Journal of adjustment to the amortization of premium or discount, if the bond is purchased at a price above or below the nominal value.

Investment Sales:

·         Difference in sale price and book value of investments in bonds are recognized as gains and losses on the contrary as

·         When selling, Cash increased by a net selling price plus interest (if any), are investing in bonds is reduced

D. Investment in Other Securities

In addition to stocks and bonds, companies can invest in other securities such as commercial slips. Listing on the investment in a commercial script that is similar to bonds. The small difference with the possibility of a discount on the type of securities it. Discount is treated as income of the holder of a commercial script that will be realized when payment slips that.

E. Investment in the Fund

Companies because of necessity (according to contract) or voluntarily set aside each year to a fund within a certain amount. The fund can be established for example for the repayment of debt (bonds), preferred stock or asset purchase. In connection with the tax provisions, for example with the establishment of funds (reserves) reclamation of mining companies whose funds must be deposited in state banks. Furthermore, the fund can be administered alone or transferred to third parties.

Investment funds that can provide results for the company, for example in the form of interest (from the deposits and other savings), dividends (stocks), and rents (of property).

F. Investment in Other Assets

The Company may invest in other assets, such as land and buildings or property. In addition because there are excess funds, the investment was intended for purposes of future expansion. Investment income is generally taxable as income. So is the profit if the investment is sold.

Conclusion

Investment securities are increasingly becoming an important option in the consideration of investment, of course, with the outbreak of the capital market. Moreover with lower interest rates for money market can cause people to turn to capital markets. According to the mean, investing in stocks can be for the purpose of short-term or long-term goals.
For some companies, investment activity is an important element of our operation, and assessment of company performance may be largely, or entirely dependent on the results reported on this activity.

Some companies make investments as a way to put the excess funds and several other companies make investments to strengthen trade relations benefit the business or get a trade.

Source:

Dr.. Gunadi, M.Sc., Akt .. Of 1997. Tax Accounting. New York: Scholastic Widiasarana Indonesia.
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