Use U.S GAAP to determine how to subsequently measure the following financial assets. Three choices of measurement basis are amortized cost, fair value through other comprehensive income, and fair value through profit or loss. Provide justification for your choice.

1. Long-term loans that are held for collecting contractual cash flows, and may be subsequently sold if the loans’ credit risk increases.

2. Long-term loans 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.

3. Mortgage loans that were originated by a mortgage broker which whose operation is to sell all loans for profit to a bank right after their origination.

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

5. A bond investment that is convertible into common stock of the bond issuer.*

6. A bond investment that pays a variable market interest rate that is capped.

7. A bond investment that pays a variable interest rate that is linked to the issuer’s net income which is not completely related to credit risk.*

8. A yen-denominated bond investment 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. *

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).

* Assume that the bond investment in 2.5, 2.6, 2.7 and 2.8 is in a business model whose objective is to hold assets to collect contractual cash flows.