We normally account for investments as a separate account in assets:
Assets:Banks:Bank ABC => Assets:Risky Investments:Investment XYZ
which is consistent with the fact of having an asset that is no longer liquid. Sometimes those investments are too risky and results are only seen after a long number of years. Call it sunk shares, fallen companies, uncertain start ups,... In those cases, accounting for that money as an Investment seems odd to me, as the financial reports show the existence of value for assets that are really not there anytime soon, and are unlikely to be collected in a real certain date. Some of them may even fail to be recovered. I see reports "dirty" for a number of years.
QUESTION: I was wondering whether we can simply take a conservative approach and account for investments as expenses. If investment is never profitable, it was already accounted at the beginning. If the investment is profitable later, it is accounted as revenue (income). Is it accepted practice when dealing with foreseeable risky, long terms investments?
Assets:Banks:Bank ABC => Expenses:Risky Investments:Investment XYZ
On eventual return of funds in the future, we will account those as profits:
Income:Risky Investments:Investment XYZ => Assets:Banks:Bank ABC
Note: this question has nothing to do with tax, or tax implications of either. Treat the question just as a mere personal or bookkeeping approach .