Are Long-Term Investments Fixed Assets?

Long-term investments usually sit in non-current assets, yet they aren’t fixed assets unless they’re operating property on the books.

Long-term investments and fixed assets often live in the same neighborhood on the balance sheet: non-current assets. That shared placement makes them easy to blend in your head. Still, they answer different questions.

Fixed assets (often shown as PP&E) tell you what a business uses to produce, deliver, and run. Long-term investments tell you where the business has placed funds or ownership stakes to earn returns or gain influence outside day-to-day operations.

What Fixed Assets Means In Plain Accounting Terms

“Fixed assets” is a business phrase that usually maps to property, plant, and equipment. Under IFRS, the main PP&E rules sit in IAS 16 Property, Plant and Equipment, which sets the basics for recognizing, measuring, depreciating, and impairing owner-used tangible assets.

Most fixed assets share the same pattern:

• Use: the asset is held to run the business, not to trade for gains.
• Form: it’s physical—land, buildings, machines, vehicles, fixtures.
• Expense timing: cost is spread over time through depreciation (land is a common exception).

People sometimes use “fixed assets” as shorthand for “anything non-current.” That shortcut can muddy the meaning, since non-current assets also include intangibles, deferred tax items, and long-term investments.

What Long-Term Investments Really Are

Long-term investments are assets held beyond the next 12 months to earn returns, protect cash, or hold a strategic stake. They can be financial instruments like bonds and shares, or ownership stakes that change how you account for results.

Three traits show up again and again:

• Intent: earn interest, dividends, value changes, or strategic ownership benefits.
• Measurement: fair value and amortized cost models are common, depending on the instrument and the reporting framework.
• Cash flow link: returns come from coupons, dividends, sales, and remeasurement, not from producing goods or services.

Why The Two Get Mixed Up

On many balance sheets, non-current assets are listed in a stack: PP&E, intangibles, goodwill, then investments. If you only see totals, it’s easy to assume “long-term” equals “fixed.”

A faster way to separate them is to ask one question: Is the asset held to run the business, or held to earn returns? Running the business points to fixed assets. Earning returns points to investments.

Are Long-Term Investments Fixed Assets? The Accounting Answer

In most cases, no. Long-term investments are non-current assets, yet they’re not fixed assets because they are not owner-used operating property.

Two cases create real confusion:

1. Owner-used real estate is PP&E (fixed assets). Calling it an “investment” in a note or dashboard can mislead readers.
2. Real estate held for rent or value changes can be “investment property” under IFRS, which is a separate class from PP&E. The split is set out in IAS 40 Investment Property.

So, “long-term” is about timing. “fixed asset” is about use. Timing alone does not make an item a fixed asset.

How IFRS Draws The Lines

IFRS does not treat “investments” as one single thing. It sorts them by what you hold and what rights you have.

Financial instruments held as investments

When the asset is a financial instrument—like a bond, loan receivable, or equity shares—IFRS points to IFRS 9 Financial Instruments. IFRS 9 sets classification and measurement based on the business model for holding the asset and the cash flow characteristics.

That model often leads to amortized cost or fair value measurement. It also drives where gains and losses are recorded. This is a different world from PP&E, where cost is usually recognized and then allocated over useful life through depreciation.

Stakes with influence or joint control

If your ownership stake gives you the power to participate in policy decisions (without control), IFRS can require equity method accounting. Under IAS 28 Investments in Associates and Joint Ventures, these holdings are presented as a single investment line, then adjusted for your share of the investee’s results and other changes.

This is still a long-term investment. It is not a fixed asset. It represents a claim on another entity’s net assets, not a building or machine you operate.

Investment property vs owner-occupied property

IAS 40 separates property held to earn rentals or to benefit from value changes from owner-occupied property. Owner-occupied property sits in PP&E under IAS 16 Property, Plant and Equipment. Investment property is reported under IAS 40 with its own measurement and disclosure choices.

This is the closest overlap with “fixed assets,” since the item is physical. The deciding factor is use. If it’s used in your operations, it’s PP&E. If it’s held to generate rental cash flows or value gains outside operations, it can be investment property.

Current vs non-current presentation

After you classify the asset, you still need to place it as current or non-current. IFRS presentation guidance sits in IAS 1 Presentation of Financial Statements. Long-term investments are commonly non-current when sale is not expected in the next 12 months. PP&E is almost always non-current. They can share the same section and still remain separate line items with separate notes.

How US Filings Often Reinforce The Split

US GAAP references differ, yet the statement layout for many companies is similar: investments are separated from property and equipment. Public company filings also follow SEC presentation and disclosure rules.

In the official balance sheet rule text, investments and property and equipment are called out as separate disclosure topics. See 17 CFR § 210.5-02 (Regulation S-X) balance sheet requirements for that structure.

How To Tell The Difference In Under A Minute

When you have a balance sheet in front of you, the fastest tell is the note style:

• PP&E note: cost, accumulated depreciation, useful lives, disposals, capital spending.
• Investment note: fair value levels, amortized cost tables, maturities, credit risk, realized and unrealized gains.
• Equity method note: ownership percentages, summarized investee data, your share of earnings.
• Investment property note (IFRS): rental income, valuation approach, fair value details if used.

If you see accumulated depreciation, you’re almost surely in fixed-asset territory. If you see fair value hierarchy language or maturity ladders, you’re in investment territory.

The table below gives a clean separator across the most common non-current asset lines. Labels vary by company, so treat this as a pattern match, not a hard template.

Balance Sheet Line	What It Usually Means	Fast Clue In Notes
Property, plant and equipment	Owner-used tangible assets that run operations	Cost, accumulated depreciation, useful lives
Right-of-use assets	Leased assets recognized under lease rules	Lease term, discount rate, maturity table for lease payments
Investment property (IFRS)	Real estate held for rent or value changes	Fair value disclosures or IAS 40 cost model details
Long-term debt investments	Bonds or notes held beyond a year	Maturities, amortized cost, credit loss method
Equity investments	Shares held for return without control	Fair value gains/losses, valuation methods for private shares
Equity method investments	Stakes with influence or joint control	Share of earnings, dividends, investee summaries
Intangibles	Non-physical rights like patents and trademarks	Amortization schedules, impairment testing notes
Deferred tax assets	Future tax benefits tied to timing differences	Tax rate reconciliation, valuation allowance discussion

What Goes Wrong When You Call Investments “Fixed”

Mislabeling can sound harmless, then it snowballs in reporting and decision-making.

• Operating metrics drift. Ratios like asset turnover can fall when you mix idle securities with operating equipment.
• Performance gets blurred. Investment gains can inflate profit in a way that does not reflect operating strength.
• Cash planning gets messy. PP&E links to capex and maintenance. Investments link to treasury policy and liquidity buffers.

Clear labels keep your story straight for lenders, buyers, and anyone scanning the statements for signals.

Examples That Settle It Fast

A machine on the factory floor

This is used to make products. It is PP&E. It gets depreciated. It sits in fixed assets.

A five-year bond portfolio

This is held to collect interest, manage liquidity, or earn a return. Under IFRS, IFRS 9 drives measurement and gain/loss reporting. It is a long-term investment, not a fixed asset.

A building rented to third parties

Under IFRS, if the property is held to earn rentals or benefit from value changes, it can be investment property under IAS 40. It is physical, yet it is not PP&E unless owner-occupied.

A 30% stake in a supplier

If that stake gives influence, IAS 28 can require equity method accounting. The holding is a long-term investment line item, not a fixed asset line item.

Classification Steps For Close Or Review

You can sort most items in a few passes. Start with use, then match the asset type to the right accounting bucket.

1. State the use in one sentence. “Used in operations” or “held for return” is enough to start.
2. Identify the form. Physical property, financial instrument, or ownership stake with influence.
3. Match to the right rule set. IAS 16 for PP&E, IAS 40 for investment property, IFRS 9 for financial instruments, IAS 28 for equity method holdings.
4. Decide current vs non-current. Tie it to expected sale or use timing, then present it accordingly.

The next table turns that into a quick decision map you can keep by your month-end checklist.

Question	Yes	No
Is it used to run operations?	PP&E (fixed assets); track depreciation and impairment	Next question
Is it real estate held for rent or value changes?	Investment property under IAS 40 (IFRS reporters)	Next question
Is it a financial instrument like a bond or share?	Classify and measure under IFRS 9	Next question
Do you have influence or joint control over the investee?	Equity method under IAS 28 (IFRS reporters)	Financial asset investment (no equity method)
Is sale expected within 12 months?	Present as current investment	Present as non-current investment

What To Read In The Notes Before You Finalize A Label

Balance sheet captions are short. Notes give the evidence behind the classification.

• PP&E: useful lives, depreciation methods, capex roll-forward, disposals.
• Financial investments: fair value hierarchy, amortized cost tables, maturity schedule, credit loss method.
• Equity method: investee summaries, ownership changes, your share of earnings.
• Investment property: rental income, fair value methods, valuation inputs when fair value is used.

If the note language is built around depreciation, you’re not dealing with a long-term investment. If it’s built around remeasurement, maturities, or valuation inputs, you’re not dealing with a fixed asset.

Takeaway That Fits Most Balance Sheets

Long-term investments and fixed assets both sit in non-current assets, yet they play different roles. Fixed assets are the tools and property a business uses to operate. Long-term investments are holdings meant to earn returns or give strategic exposure outside operations.

When you separate them cleanly, your statements read better, your ratios tell a clearer story, and anyone reviewing the books spends less time guessing what’s inside each line item.