How to Show Investments on a Balance Sheet

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The balance sheet is a financial statement that reflects a company's assets, liabilities and equity for the financial year. Short and long-term investments are typically comprised of real estate, stocks, bonds, and investments made towards a company's subsidiaries or affiliate companies. These balances are reflected in a specific section on the balance sheet. Here's how to show these investments accurately on the balance sheet reporting schedule.

Things You'll Need

  • Calculator
  • Balance Sheet
  • Income Statement
  • Listing of stock investments
  • Calculate both the at cost and market value of stocks purchased in the financial year. The lower of the two will be reported in the short-term investment section if the company plans to sell the stocks within the upcoming year and reported under the Current Assets section. If the company plans on holding onto the stock for more than a year, the stock value will be reported as a long-term investment under the Fixed Assets section in the left hand column of the balance sheet.

  • Calculate both the at cost and market value of bonds purchased by the company. The lower of the two will be reported in the short-term investment section if the company plans to hold the bonds for less than a year, and in the long-term investment section if the company plans to hold the bonds for longer than a year. These will be reported under the Current Assets if they are short-term investments, and Fixed Assets section if they are long-term investments.

  • Calculate both the at cost and market value of real estate purchased in the financial year. The lower of the two will typically be reported in the long-term investment section of the balance sheet. Real estate investments can be reported under the Current Assets if they are short-term investments, and Fixed Assets section if they are long-term investments.

  • Determine the value of investments made towards the company's affiliate accounts. These can be company affiliations or partnership agreements where the company has invested stock or cash into certain projects. These are typically short-term investments which are then reported under the Current Assets section.

  • Determine the value of stock invested in subsidiary companies. These stock investments are typically long-term investments and are reported under the Fixed Assets section.

Tips & Warnings

  • Short-term investments that have a high liquidity value are typically reported under Current Assets
  • Inventory is not considered to be an investment, and is typically reported in Current Assets after depreciation is calculated

References

  • Photo Credit inbj/iStock/Getty Images
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