Classified Balance Sheet 4-25

Long-Term Investments
Long-term investments are generally (1) investments in stocks and bonds of other companies
that are normally held for many years, (2) long-term assets such as land or buildings that a ALTERNATIVE
company is not currently using in its operating activities, and (3) long-term notes receivable TERMINOLOGY
(see Alternative Terminology). In Illustration 4.21, Franklin Company reported total long- Long-term investments are
term investments of $7,200 on its balance sheet. Alphabet Inc. reported long-term invest- often referred to simply as
ments in its balance sheet, as shown in Illustration 4.23. investments.

Alphabet Inc. ILLUSTRATION 4.23

Real
World Balance Sheet (partial) Long-term investments section
(in millions)
Long-term investments
Non-marketable equity investments $1,469

Property, Plant, and Equipment ALTERNATIVE

TERMINOLOGY
Property, plant, and equipment are assets with relatively long useful lives that a company
is currently using in operating the business. This category includes land, buildings, machinery Property, plant, and equip-
and equipment, delivery equipment, and furniture (see Alternative Terminology). In Illustra- ment is sometimes called
fixed assets or plant assets.
tion 4.21, Franklin Company reported property, plant, and equipment of $29,000.
Depreciation is the practice of allocating the cost of assets to a number of years. Com-
panies do this by systematically assigning a portion of an asset’s cost as an expense each year
(rather than expensing the full purchase price in the year of purchase). The assets that the com-
pany depreciates are reported on the balance sheet at cost less accumulated depreciation. The
accumulated depreciation account shows the total amount of depreciation that the company
has expensed thus far in the asset’s life. In Illustration 4.21, Franklin Company reported accu-
mulated depreciation of $5,000. Illustration 4.24 presents the property, plant, and equipment
of Tesla Motors, Inc.

Tesla Motors, Inc. ILLUSTRATION 4.24

Real
World Balance Sheet (partial) Property, plant, and equipment
(in thousands) section
Property, plant, and equipment
Machinery, equipment and office furniture $ 322,394
Tooling 230,385
Leasehold improvements 94,763
Building and building improvements 67,707
Land 45,020
Computer equipment and software 42,073
Construction in progress 76,294
878,636
Less: Accumulated depreciation 140,142
Total $ 738,494

Intangible Assets HELPFUL HINT

Many companies have long-lived assets that do not have physical substance yet often are very Sometimes intangible assets
valuable. We call these assets intangible assets (see Helpful Hint). One significant intangible are reported under a broader
asset is goodwill. Others include patents, copyrights, and trademarks or trade names that give heading called “Other assets.”