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  • Topic: Goldman Sachs, Fair value, Henry Paulson
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  • Published : February 21, 2013
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Introduction: The purpose of this assignment is for you to learn more about the fair value disclosure requirements included in the FASB Accounting Standards Codification (the Codification). You will do so by examining fair value disclosures included in the following filings:

* Form 10-Q for Microsoft Corporation (MSFT) for its quarter ended March 31, 2012, filed with the SEC on April 19, 2012 and * Form 10-Q for The Goldman Sachs Group, Inc. (GS) for its quarter ended June 30, 2012, filed with the SEC on August 9, 2012.

The majority of the questions in this assignment can be answered by referring to the financial statements (Item 1) and Notes to Financial Statements in these Form 10-Qs.

Name(s):

Questions:
Microsoft Corporation

1. List three types of non-derivative investments held by Microsoft for which the corresponding fair value measurements fall within Level 1 of the fair value hierarchy. Why do the fair value measurements for these investments fall within Level 1 of the fair value hierarchy?

Answer:

2. List three types of non-derivative investments held by Microsoft for which the corresponding fair value measurements fall within Level 2 of the fair value hierarchy. Why do the fair value measurements for these investments fall within Level 2 of the fair value hierarchy?

Answer:

3. The fair value measurements for what type of non-derivative assets held by Microsoft falls within Level 3 of the fair value hierarchy? Why does this fair value measurement fall within Level 3 of the fair value hierarchy? How are these assets valued and what types of inputs are used in their valuation?

Answer:

4. Fill in the table with the appropriate amounts as of March 31, 2012, in millions:

A| Total fair value of Microsoft’s financial instruments classified as assets that are measured at fair value on a recurring basis for which the corresponding measurements fall within Level 1 of the fair value hierarchy| | |

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B| Total fair value of Microsoft’s financial instruments classified as assets that are measured at fair value on a recurring basis for which the corresponding measurements fall within Level 2 of the fair value hierarchy| | C| Total fair value of Microsoft’s financial instruments classified as assets that are measured at fair value on a recurring basis for which the corresponding measurements fall within Level 3 of the fair value hierarchy| | D| Total fair value of Microsoft’s financial instruments classified as liabilities that are measured at fair value on a recurring basis for which the corresponding measurements fall within Level 1 of the fair value hierarchy| | E| Total fair value of Microsoft’s financial instruments classified as liabilities that are measured at fair value on a recurring basis for which the corresponding measurements fall within Level 2 of the fair value hierarchy| | F| Total fair value of Microsoft’s financial instruments classified as liabilities that are measured at fair value on a recurring basis for which the corresponding measurements fall within Level 3 of the fair value hierarchy| |

5. What two places were the changes in financial instruments measured at Level 3 fair value on a recurring basis (total realized and unrealized gains (losses)) included for Microsoft?

Answer:

6. For Microsoft’s assets and liabilities measured at fair value on a non-recurring basis, how much other-than-temporary impairment was recorded during the three-months ended March 31, 2012?

Answer:

7. What was the estimated fair value of Microsoft’s long-term debt at March 31, 2012? How was this fair value determined? Which level within the fair value hierarchy did this fair value measurement fall?

Answer:

8. What types of controls does Microsoft have in place with respect to the processes it uses to measure the fair value of its investments? Hint: Refer to the Management’s Discussion and Analysis section (Item...
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