You are interning at a local CPA firm during the spring semester of your graduate year. About three weeks into
your internship your supervisor asks you to research a question using the Codification.
A client (NEAT Industries) has asked your CPA firm for guidance on how to apply the fair value hierarchy to several assets as NEAT will require fair values to prepare its balance sheet. NEAT Industries has asked your firm what sections and sub-sections, if any, of the Codification would pertain in valuing each asset. NEAT has 3 assets that require valuation. They want you to detail which level of hierarchical input applies to each asset and for you to also explain what the appropriate value would be once the hierarchy is applied.
Asset #1: Investment in local school district bonds. Par value of the bonds is $2,000,000. Stated interest rate is 8%. The bonds were purchased a year ago at a 1% premium above par value. The bonds will mature in 19 years. Other information: