Video: Current Assets and Long Term Investments

In this lesson, delve into the world of current assets and long-term investments with Nick Palazzolo, CPA, as he breaks down the criteria that separate current assets from long-term assets on the balance sheet. Learn the significance of the one-year rule in classifying assets and how this impacts their categorization as either current or fixed. Nick also clarifies the concept of liquidity and why it's essential for current assets to be presented in order of liquidity from most to least. He provides practical insights into the valuation of these assets, explaining why some, like cash and accounts receivable, may be shown at face value or net realizable value, while others such as land and buildings are listed at historical cost. With examples to illustrate his points, the intricacies of balance sheet presentations for different asset types are made accessible, from trading securities to long-term investments in subsidiaries and affiliated companies.