Buying property and selling it some years down the line too is profitable. But a caveat is necessary here as all properties might not sell at a profit. In fact some properties depreciate that can incur loss for you. Long term assets periodically depreciate over a period of time. However some assets like stocks, direct investments do not decrease in value through depreciation.
For businesses a long term asset includes plants, property (land, buildings), leasehold improvements, vehicles, furniture and fixtures and equipment. Also the maintenance, upkeep, renovation, restoration of these properties has to be taken into account as well when preparing the balance sheet because they might translate into liabilities.
Long term liabilities are in tandem with long term liabilities. Long term liabilities are bonds that are due or that should be paid at the end of a year. Mortgage payable also come under long term liabilities. Notes payable are amount owed on debts.
So how do you make a profit out of long term assets? One is to research, plan and then buy. Buying property, plant, or equipment (PPE) is not everyone’s piece of cake. A lot of thought goes into while buying a property. Always take into consideration the amount needed for its upkeep and its depreciation value as well. If the upkeep is more, then the property will depreciate faster and you might not be able to garner any profit out of it. Hence it’s always advisable to go to your accountant and research as well.
On the balance sheet you might see a column of total long term assets. This is the accumulation of the value of company’s assets minus the depreciation. This gives a very clear picture of the profit that our company has achieved.