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Using the information in the attached exhibits, determine the appropriate measurement basis required by U.S. GAAP for each of the independent transactions in column A. In column B, select the appropriate measurement basis from the following options: Fair Value, Historical Cost, or Amortized Cost. In column C, enter the amount to be reported on the balance sheet.

A: Financial Statement Item B: Measurement C: Balance Sheet Basis Amount 1 On June 30, Year 1, 1,000 shares of stock in Pepper Co. were purchased at a price of $26.50 per share. On December 31, the company still holds the investment, but stock prices have significantly increased. The company intends to sell the investment shortly after year-end in the hopes of recording a gain. 2 Jerry Co. purchased land 15 years ago as an investment property at a cost of $125,000. The company has a contract to sell the land in January of the next year for a price of $875,000. 3 JJ Frazier Inc. owns 150 shares of stock in Gaines Co. that is traded on multiple exchanges. 4 Broccoli Co. acquired Asparagus Co. four years ago, recording $900,000 of goodwill as part of the acquisition. No impairment losses were recorded in prior years. Maten Inc. reports cash and cash equivalents on the balance sheet. All certificates of deposit and Treasury bills held by Maten have a maturity date of less than three months from the date of purchase. 6 Early in Year 1, Crump Inc. purchased an investment in bonds issued by Sliding Rock Inc. at their par value of $800,000. At the purchase date, Crump decided to hold the investment for the 10-year life of the bonds. The fair value of the bonds on December 31, Year 1, was $755,000. Exhibit 1: Stock Price of Pepper Co. Year Date so 0 0 0 0 0 0 0 0 0 0 0 0 1 Price 31-Jan $ 60.24 28-Feb $ 68.46 31-Mar $ 62.57 30-Apr $ 54.65 31-May $ 47.01 30-Jun $ 50.21 31-Jul $ 50.23 31-Aug $ 41.29 30-Sep $ 36.80 31-Oct $ 24.88 30-Nov $ 29.60 31-Dec $ 31.10 31-Jan $ 21.71 28-Feb $ 18.06 31-Mar $ 21.66 30-Apr $ 21.11 31-May $ 28.00 30-Jun $ 26.50 31-Jul $ 27.77 31-Aug $ 36.80 30-Sep $ 47.01 31-Oct $ 68.46 30-Nov $ 63.30 31-Dec $ 72.00 31-Jan $ 77.70 29-Feb $ 82.20 31-Mar $ 94.01 1 1 1 1 1 1 1 1 1 1 1 2 2 2 Exhibit 2: Information on JJ Frazier Inc. Concerning Gaines Stock Facts: Gaines Co.'s stock trades on two exchanges. JJ Frazier Inc. has access to both the New York and the London markets, although neither is considered to be the principal market. The stock price and transaction costs at year-end are as follows: Exchange Quoted Stock Price Transaction Costs New York London $ $ 84.00 80.00 $ $ 10.00 5.00 Hint: research FASB ASC 820-10-35A: http://www2.aaahq.org/ascLogin.cfm Username - AAA50943 Password - c3V7CER Note that the "most advantageous market" refers to the market that yields a higher "net price", which is the difference between the transaction price and transaction cost. Exhibit 3: Letter From Value Brothers and Associates to Broccoli Co. To: Broccoli Co. From: Value Brothers and Associates Re: Valuation of Asparagus Co. We have performed the annual impairment testing related to your prior year acquisition of Asparagus Co. and believe that the value initi9ally recorded as goodwill is still relevant and no impairment write- down is required in this year's financial statements. Thanks for your business and we look forward to serving you in the future! Value Brothers and Associates Exhibit 4: Extract From Maten Inc.'s Year-End Trial Balance Acct. No. Ledger Account 1000 Cash 1001 Payroll bank account 1002 Operating bank account 1100 Treasury bills 1200 Certificate of deposit 1 1201 Certificate of deposit 2 1300 Equity investments 1400 Accounts receivable 12/31/Yearend $ 200,000 $ 50,000 $ 450,000 $ 25,000 $ 80,000 $ 150,000 $ 800,000 490,000 A: Financial Statement Item B: Measurement C: Balance Sheet Basis Amount 1 On June 30, Year 1, 1,000 shares of stock in Pepper Co. were purchased at a price of $26.50 per share. On December 31, the company still holds the investment, but stock prices have significantly increased. The company intends to sell the investment shortly after year-end in the hopes of recording a gain. 2 Jerry Co. purchased land 15 years ago as an investment property at a cost of $125,000. The company has a contract to sell the land in January of the next year for a price of $875,000. 3 JJ Frazier Inc. owns 150 shares of stock in Gaines Co. that is traded on multiple exchanges. 4 Broccoli Co. acquired Asparagus Co. four years ago, recording $900,000 of goodwill as part of the acquisition. No impairment losses were recorded in prior years. Maten Inc. reports cash and cash equivalents on the balance sheet. All certificates of deposit and Treasury bills held by Maten have a maturity date of less than three months from the date of purchase. 6 Early in Year 1, Crump Inc. purchased an investment in bonds issued by Sliding Rock Inc. at their par value of $800,000. At the purchase date, Crump decided to hold the investment for the 10-year life of the bonds. The fair value of the bonds on December 31, Year 1, was $755,000. Exhibit 1: Stock Price of Pepper Co. Year Date so 0 0 0 0 0 0 0 0 0 0 0 0 1 Price 31-Jan $ 60.24 28-Feb $ 68.46 31-Mar $ 62.57 30-Apr $ 54.65 31-May $ 47.01 30-Jun $ 50.21 31-Jul $ 50.23 31-Aug $ 41.29 30-Sep $ 36.80 31-Oct $ 24.88 30-Nov $ 29.60 31-Dec $ 31.10 31-Jan $ 21.71 28-Feb $ 18.06 31-Mar $ 21.66 30-Apr $ 21.11 31-May $ 28.00 30-Jun $ 26.50 31-Jul $ 27.77 31-Aug $ 36.80 30-Sep $ 47.01 31-Oct $ 68.46 30-Nov $ 63.30 31-Dec $ 72.00 31-Jan $ 77.70 29-Feb $ 82.20 31-Mar $ 94.01 1 1 1 1 1 1 1 1 1 1 1 2 2 2 Exhibit 2: Information on JJ Frazier Inc. Concerning Gaines Stock Facts: Gaines Co.'s stock trades on two exchanges. JJ Frazier Inc. has access to both the New York and the London markets, although neither is considered to be the principal market. The stock price and transaction costs at year-end are as follows: Exchange Quoted Stock Price Transaction Costs New York London $ $ 84.00 80.00 $ $ 10.00 5.00 Hint: research FASB ASC 820-10-35A: http://www2.aaahq.org/ascLogin.cfm Username - AAA50943 Password - c3V7CER Note that the "most advantageous market" refers to the market that yields a higher "net price", which is the difference between the transaction price and transaction cost. Exhibit 3: Letter From Value Brothers and Associates to Broccoli Co. To: Broccoli Co. From: Value Brothers and Associates Re: Valuation of Asparagus Co. We have performed the annual impairment testing related to your prior year acquisition of Asparagus Co. and believe that the value initi9ally recorded as goodwill is still relevant and no impairment write- down is required in this year's financial statements. Thanks for your business and we look forward to serving you in the future! Value Brothers and Associates Exhibit 4: Extract From Maten Inc.'s Year-End Trial Balance Acct. No. Ledger Account 1000 Cash 1001 Payroll bank account 1002 Operating bank account 1100 Treasury bills 1200 Certificate of deposit 1 1201 Certificate of deposit 2 1300 Equity investments 1400 Accounts receivable 12/31/Yearend $ 200,000 $ 50,000 $ 450,000 $ 25,000 $ 80,000 $ 150,000 $ 800,000 490,000

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