Use U S GAAP to determine how to subsequently measure the ten financial assets in requirement Three choices of measurement basis are amortized cost, fair value through other comprehensive income, and fair value through profit or loss Feel free to make an assumption and besure to provide justification for your answer Long term loans that are held for collecting contractual cash flows till their maturities, but may be subsequently sold if the loans credit risk substantially increases Investments in bonds that are held for collecting contractual cash flows, and may be subsequently sold to re invest the cash in financial assets with a higher return Subprime (high risk) mortgage loans that were originated by a mortgage broker firm that always sell these loans to banks right after their origination Forward contracts that an EU bank purchased to hedge the exposure to changes in fair value of US$ denominated loans 5 Investment in bonds that are convertible into common stock of the bond issuer Investment in bonds that pay a variable market interest rate that is capped, and may be sold if interest rate starts to go up 7 Investment in bonds that pay a variable interest rate that is linked to the issuers net income which is not completely related to credit risk The bank may sell this investment if the issuers net income drops significantly 8 Investment in yen denominated 10 year bonds with payments of principal and interest that are linked to an inflation index of yen The principal is protected but the inflation link is not leveraged The bondholder has no plan to sell this bond investment 9 Portfolio of equity and debt securities held by an insurer to fund insurance contract liabilities using the proceeds from the contractual cash flows on these securities and engaging in significant buying and selling on a daily basis to rebalance its portfolio and to meet cash flow needs as they arise 10 Long term investment in Google stock in a retirement fund for Googles employees (not for trading)

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Use U.S. GAAP to determine how to subsequently measure the ten financial assets in requirement Three choices of measurement basis are amortized cost, fair value

Use U.S. GAAP to determine how to subsequently measure the ten financial assets in requirement Three choices of measurement basis are amortized cost, fair value through other comprehensive income, and fair value through profit or loss. Feel free to make an assumption and besure to provide justification for your answer.

Long-term loans that are held for collecting contractual cash flows till their maturities, but may be subsequently sold if the loans’ credit risk substantially increases.

Investments in bonds that are held for collecting contractual cash flows, and may be subsequently sold to re-invest the cash in financial assets with a higher return.

Subprime (high risk) mortgage loans that were originated by a mortgage-broker firm that always sell these loans to banks right after their origination.

Forward contracts that an EU bank purchased to hedge the exposure to changes in fair value of US$-denominated loans.

5. Investment in bonds that are convertible into common stock of the bond issuer.

Investment in bonds that pay a variable market interest rate that is capped, and may be sold if interest rate starts to go up.

7. Investment in bonds that pay a variable interest rate that is linked to the issuer’s net income which is not completely related to credit risk.The bank may sell this investment if the issuer’s net income drops significantly.

8. Investment in yen-denominated 10-year bonds with payments of principal and interest that are linked to an inflation index of yen. The principal is protected but the inflation link is not leveraged. The bondholder has no plan to sell this bond investment.

9. Portfolio of equity and debt securities held by an insurer to fund insurance contract liabilities using the proceeds from the contractual cash flows on these securities and engaging in significant buying and selling on a daily basis to rebalance its portfolio and to meet cash flow needs as they arise.

10. Long-term investment in Google stock in a retirement fund for Google’s employees (not for trading).

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Lets analyze each financial asset based on US GAAPs measurement basis choices 1 Longterm loans held for collecting contractual cash flows These would typically be measured at amortized cost as they ar... blur-text-image