What Is a Short-Term Investment?

Short-term investments refer to various securities purchased by an enterprise that can be realised at any time and held for less than one year, and other investments that do not exceed one year. Marketable securities include various stocks and bonds, such as purchasing various stocks issued by other joint-stock companies, various bonds issued by governments or other enterprises (treasury bills, national key construction bonds, local government bonds, and corporate financing bonds, etc.); other Investment such as monetary funds, materials, fixed assets and intangible assets invested by other enterprises. ^[1]

Short-term investments

Short-term investments refer to various securities purchased by an enterprise that can be realised at any time and held for less than one year, and other investments that do not exceed one year. Marketable securities include various stocks and bonds, such as purchasing various stocks issued by other joint-stock companies, various bonds issued by governments or other enterprises (treasury bills, national key construction bonds, local government bonds, and corporate financing bonds, etc.); other Investment such as monetary funds, materials, fixed assets and intangible assets invested by other enterprises. ^[1]

Short-term investments are

1) Stocks, bonds, funds, etc. that are exchanged for fixed assets as short-term investments, and do not involve premium:

borrow:

1) Exchange of intangible assets into stocks, bonds, funds, etc. as short-term investments, which do not involve premium:

Borrowing: Short-term investments-Stocks, bonds, funds (based on the book value of the assets exchanged out plus related taxes and fees payable)

1) Exchange of long-term investment into stocks, bonds, funds, etc. as short-term investment, which does not involve premium:

Borrowing: short-term investments ×× stocks, bonds, funds (based on the book value of the assets exchanged out plus relevant taxes and fees payable)

Long-term investment impairment provision (impaired provision for swapped out assets)

loan:

The sale of stocks, bonds, funds or the recovery of principal and interest of bonds due to an enterprise shall be handled as follows:

Borrow: bank deposit (the actual amount received)

Short-term investment price reserve

Investment income (the actual amount received is less than the difference between cost and uncollected cash dividends and interest)

Loans: Short-term investments (at the cost of selling or recovering short-term investments)

Dividends receivable and interest receivable (based on uncollected cash dividends and interest)

Investment income (the actual amount received is greater than the difference between the cost and uncollected cash dividends and interest)

When an enterprise sells short-term investments such as stocks and bonds, the short-term investment costs carried forward can be determined by the weighted average method, first-in-first-out method, last-in-first-out method, and individual valuation method. When a short-term investment is partially sold, the cost of the part sold should be determined based on the total average cost of the investment. Once the method for calculating the short-term investment cost of an enterprise is determined, it cannot be changed at will. If changes are needed, they should be explained in the notes to the accounting statements.