Any investment which has a horizon of one year or more is considered a long-term investment. Long-term investments are investments made by a company in order to secure an additional income stream or a strategic goal. Such investments can range from anything from buying a minority stake at another company to long-run hedges against oil prices. Berkshire Hathaway 's investment in Coca-Cola and Southwest Airlines' hedge against high oil prices are good examples of long-term investments.
Companies need to exercise prudence in reporting the value of these investments. They are reported at the lower of purchase price or market value. Any gains from these investments are only recorded after the sale of the position. These gains are subject to capital gains taxes rather than income taxes.
