Long-term securities are similar to short-term securities, where a company can invest in human resources, bonds, stocks, real estate, equipment, cash, etc. The advantage of long-term investments is that they allow a business to earn steady income over a longer period of time than short-term investments. Some people may wonder why a company invests in human resources, without realizing that having a staff of workers helps reduce costs. While this is an indirect cost to an entity, it can be beneficial, due to continuity of operations. An entity can save on training new personnel and supplies will continue to meet demand for the products or services provided by the company. The main difference between short-term securities and long-term securities is that short-term securities are sold in a short period, while long-term securities may never be sold (Schroeder et al, 2011). Companies may invest in long-term securities, with the impression that the security will mature in ten or fifteen years. Some companies invest millions of dollars in long-term securities and risk the possibility of making a profit; However, so many changes occur in the economy, regulations and government policies over time, and even the change in competition can prove challenging for a period of time. Therefore, managers should make strategic decisions about the kinds of long-term investments that would benefit their companies and their shareholders. Investors are particularly interested in predicting a company's future cash flow and associated risks (Arora et al, 2014). Schroeder et al (2011) stated that long-term assets such as property, plant and machinery are assets that are not easily convertible into cash and represent the main source of a company's future existence. ...... half of the paper ......20% or more of the shares can have an influence on the investee. However, interpretation no. FASB 35 suggests that regardless of whether an investor owns 20% of a firm, he or she may be refrained from using the equity method due to the following explanation from Schroder et al (2011): • The investee objects to the investor's rights to use the equity method, by the government regulatory authority and challenging the investor's ability to exercise significant influence.• Both parties have a signed agreement that the investor renounces his rights as a shareholder.• Ownership of the investee is controlled by a small group that operates independently of the opinions of other investors. • The investor needs or wants more financial information than is available to the investee's other shareholders. • The investor seeks and fails to obtain representation on the board of directors.