What is the difference between corporate long term investment and long term equity investment?

Investment refers to another asset acquired by an enterprise by transferring assets to other units for the purpose of increasing wealth through distribution or seeking other benefits.

Short-term investments are investments that can be cashed out at any time and are not intended to be held for more than one year.

Long-term investment refers to investments other than short-term investments.

Long-term investment is divided into long-term debt investment and long-term equity investment. Long-term equity investment refers to the acquisition of shares of the investee through investment, including ** investment and other equity investments.

Long-term equity investment is divided into the following four types according to the impact on the investee:

1) Control refers to the right to determine the financial and operational policies of an enterprise, and to obtain benefits from the business activities of the enterprise.

2) Joint control refers to the common control of an economic activity as agreed in the contract.

3) Significant influence refers to having the power to participate in decision-making on an enterprise's financial and operational policies, but does not determine those policies.

4) No control, no common control, and no significant impact.

In long-term equity investment, the part of investment income will affect the profit of the enterprise, and if the investment cost is offset or included in the fair value change of the investment, it will only affect the book value of the long-term equity investment in the end, and will not affect the profit. The specific impact depends on whether it belongs to the cost method or the equity method, as well as the specific business situation.

Long-term equity investment is a type of long-term investment, and long-term investment also includes long-term debt investment.

If the initial investment cost of a long-term equity investment is greater than the fair value share of the investee's identifiable net assets at the time of investment, the initial investment cost of the long-term equity investment shall not be adjusted; If the initial investment cost of a long-term equity investment is less than the fair value share of the investee's identifiable net assets at the time of investment, the difference shall be applied.

Scope of cost-based accounting:

A long-term equity investment in which an enterprise is able to exercise control over the investee. That is, the long-term equity investment of the enterprise in the subsidiary.

The enterprise does not have control, joint control or significant influence over the investee, and does not have a long-term equity investment in an active market and its fair value cannot be reliably measured.

Risks and benefits coexist. Obtain financial benefits and take corresponding risks.

The ultimate goal of long-term equity investment is to obtain greater economic benefits, which can be obtained through the sharing of profits or dividends, or through other means, such as the products produced by the investee unit are the raw materials required for the production of the investment enterprise, and the raw materials fluctuate greatly in the market and cannot be guaranteed.

In this case, the investment enterprise can control or exert significant influence on the investee through the shares it holds, so that the raw materials required for its production can be obtained directly from the investee, and it is relatively stable to ensure the smooth progress of its production and operation. However, if the investee is in poor operating condition or goes into bankruptcy liquidation, the investment enterprise, as a shareholder, also needs to bear the corresponding investment losses.

Cost method: long-term equity investment.

Under the equity method: long-term equity investment - cost.

This refers to the equity method or the cost method.

Long-term equity investment means that the investor's investment in the investee is equity in nature and is held for a long time, and long-term equity investment requires a certain cost, that is, the cost of long-term equity investment, which is valued by the long-term equity investment cost method.

Long-term investments are investments that do not meet the conditions of short-term investments, i.e., investments that are not intended to be converted into cash within a business cycle of one year or more. Long-term investments are divided into long-term ** investments, long-term bond investments, and other long-term investments according to their nature. In order to account for long-term investment business, enterprises should set up a "long-term equity investment" account.

Long-term equity investment refers to the acquisition of shares of the investee through investment. An enterprise's equity investment in other units is usually for long-term holding, as well as to achieve control over the investee through equity investment, or to exert significant influence on the investee, or to establish a close relationship with the investee to diversify the operational risk.

Further information: The purpose of long-term equity investment is to hold the shares of the investee for a long time, become a shareholder of the investee, and through the shares held, exercise control or exert significant influence on the investee, or to improve and consolidate the relationship, or hold long-term equity investment that is not easy to realize.

A long-term equity investment is a long-term investment made by a business to acquire equity in another business, usually held for a longer period of time and not ready to be liquidated at any time. An investment enterprise is a shareholder of the invested enterprise. The main purpose of equity long-term investment is to strengthen business ties with other enterprises (such as raw material merchants or commodity distributors of the enterprise), or to influence or even control the major business decisions and financial policies of its affiliates.

Equity represents a type of ultimate ownership, which embodies the owner's voting rights over the management of the business and the distribution of income. Long-term investment in equity is an effective way to diversify and reduce systemic risk in the industry.

Joint control refers to the joint control of an economic activity as agreed in a contract. Joint control exists only if important financial and business decisions related to such economic activity require the unanimous consent of the investors who hold control. Where the investing enterprise and other parties jointly control the investee, the investee is a joint venture of the enterprise.

The difference between a joint venture and a joint venture is that all parties to a joint venture are subject to the limitations and constraints of a joint venture contract. Generally speaking, when a joint venture is established, the parties to the joint venture stipulate in the investment contract or agreement that they must obtain the consent of the parties to the joint venture in the process of making important financial and production and operation decisions about the established joint venture. The essence of joint control is the joint control of a joint venture established under a contract and shared by the parties to the joint venture.

In practice, when determining whether joint control is constituted, the basis for determining whether joint control is usually based on the situation that can usually be made: the parties to the joint venture cannot independently control the production and business activities of the joint venture. Decisions regarding the basic business activities of a joint venture require the unanimous consent of all parties to the joint venture.

The joint venture parties may designate a joint venture party to manage the day-to-day activities of the joint venture by contract or agreement, provided that management rights are exercised within the financial and operational policies agreed upon by the joint venture parties.