Introduction: The purpose of this assignment is for you to learn more about the fair value disclosure requirements included in…

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 The Goldman Sachs Group, Inc. (GS) for its quarter ended June 30, 2013, filed with the SEC on August 8, 2013.

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.

1)Under what circumstances does Goldman Sachs classify over-the-counter derivative contracts within Level 3 of the fair value hierarchy?

Answer:

2)How are trading assets and trading liabilities classified within Level 3 of the fair value hierarchy initially valued and why?  How are they valued subsequently and when are the inputs and assumptions changed?

Answer: 

3)As of June 30, 2013, approximately what percentages of Goldman’s financial assets measured at fair value fall within Level 1, Level 2, and Level 3 of the fair value hierarchy, respectively?  Show your calculations.

Answer:  

4)As of June 30, 2013, approximately what percentages of Goldman’s financial liabilities measured at fair value fall within Level 1, Level 2, and Level 3 of the fair value hierarchy, respectively?  Show your calculations.

Answer:  

5)What is the total amount of unrealized gain or loss on Goldman Sachs’ financial assets and financial liabilities classified within Level 3 of the fair value hierarchy that are still held at the June 30, 2013 reporting date for the three months ended on that date?  For the six months ended on that date?

Answer:  

6)What is the amount of transfers between the levels 1 & 2  of the fair value hierarchy for the three months ending June 30,2013?  For the six months ending on that date?

Answer:  

7)Comment on the overall value of the information disclosed by Goldman Sachs to comply with the fair value disclosure requirements in the Codification. Focus on its overall understandability and usefulness to the users of the financial statements.  Also, discuss the inclusion of ASU 2011-04 in the disclosures.  

Answer: