Question - Locate the fiscal year 2012 10-K for the Morgan Stanley assigned to your group. Use this filing to respond to the following questions, and explain your responses.
Your responses should be presented as a group case memo of no more than ten pages (12-point Times New Roman font, one-inch margin on all sides double spacing in the main text and single spacing in the header) using the format in the Memo Guidelines available under Course Documents on Blackboard. If needed, financial statement tables and other numeric computations should be presented as exhibits, which do not count toward the page limit. For more details of the format requirement, please refer to the syllabus.
Required:
1. What are some of the company's most significant assets and liabilities that are measured at fair value on a recurring basis? Relative to the company's total assets, how big are these fair value assets and liabilities? How much of the company's fair value assets and liabilities was measured using Level 1, Level 2, and Level 3 inputs under ASC 820?
2. For the most significant (by dollar amount) asset item and the most significant liability item measured using Level 3 inputs, locate the company's 'valuation technique' disclosure. Briefly summarize the company's approach to measuring the two items.
3. Locate the company's disclosure of financial assets and liabilities disclosed at fair value, but which are not reported at fair value in the financial statement. Describe the most significant of these assets and liabilities. Was the difference between carrying value and fair value significant? Explain.
4. Did the company report gains or losses that resulted from valuation adjustment for its financial liabilities for which the Company had elected the fair value option? If yes, how much? Would you interpret such gains or losses the same way you interpret the Company's bottom line earnings? Explain. ASU 2016-01 proposes to move the fair value gains and losses resulted from revaluation of the company's financial liabilities to other comprehensive income. Do you support this change? Why or why not? Explain.