Final answer:
Long-lived assets not used in daily business operations are classified as investments. Fixed assets are tied to the company's core operations, whereas investments like collectibles have potential for value appreciation but are not central to business processes.
Step-by-step explanation:
If a purchased item is long-lived but not used in normal operations, the asset is classified and recorded as a(n) investment. This classification is used for assets that are not directly tied to the daily operations of a business, such as collectibles, which can include paintings, fine wine, jewelry, antiques, or baseball cards. These items represent an expenditure with the potential to provide returns through appreciation in value or resale at a higher price, rather than through direct contribution to the production or service processes of a company.Fixed assets, on the other hand, like machinery or equipment, are used in the regular operations of a business and have a role in production or service delivery. They incur fixed costs due to their unchanging nature in the short run, such as rent for factory space or equipment for product manufacturing. Fixed costs are expenditures that may vary by industry but are generally associated with the operations of the business.Therefore, the correct answer is B) investment, since a long-lived asset not used in normal operations is not considered a fixed asset, which would be involved in daily business activities, nor an expense that is consumed within the operations, or a contra asset, which would act to reduce the balance of an associated asset.