Final answer:
An auditor primarily uses substantive analytical procedures as audit evidence to support the existence and ownership of long-term investments, rather than valuation or classification of gains and losses.
Step-by-step explanation:
An auditor testing long-term investments would primarily use substantive analytical procedures to support the reasonableness of the existence and ownership of investments. This is because analytical procedures can compare current investment data with other relevant data to identify any inconsistencies or discrepancies. When it comes to valuation of marketable equity securities, classification of gains and losses, and completeness of recorded investment income, auditors might use a combination of procedures including examination of documents, confirmation, and analytical procedures depending on the risk assessments and audit objectives.
When investing in tangible assets like real estate, collectibles, or machinery, investors must consider factors like the rate of return, risk, liquidity, and whether there will be additional nonfinancial benefits. The choice of financial capital to fund such investments can include early-stage investors, reinvesting profits, borrowing, or selling stock. Wise investment decisions involve a thorough analysis of the financial asset's characteristics and the investor's own goals.