Goldman Sachs 2015 Annual Report Download - page 146

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Transfers Between Levels of the Fair Value Hierarchy
Transfers between levels of the fair value hierarchy are
reported at the beginning of the reporting period in which
they occur.
During 2015:
‰Transfers into level 2 from level 1 of cash instruments
were $260 million, reflecting transfers of public equity
securities primarily due to decreased market activity in
these instruments.
‰Transfers into level 1 from level 2 of cash instruments
were $283 million, reflecting transfers of public equity
securities due to increased market activity in these
instruments.
During 2014:
‰Transfers into level 2 from level 1 of cash instruments
were $60 million, including $47 million of public equity
securities and $13 million of U.S. government and federal
agency obligations due to decreased market activity in
these instruments.
‰Transfers into level 1 from level 2 of cash instruments
were $92 million, reflecting transfers of public equity
securities due to increased market activity in these
instruments.
See level 3 rollforward below for information about
transfers between level 2 and level 3.
Level 3 Rollforward
The table below presents changes in fair value for all cash
instrument assets and liabilities categorized as level 3 as of
the end of the year. In the table below:
‰If a cash instrument asset or liability was transferred to
level 3 during a reporting period, its entire gain or loss for
the period is included in level 3. For level 3 cash
instrument assets, increases are shown as positive
amounts, while decreases are shown as negative amounts.
For level 3 cash instrument liabilities, increases are shown
as negative amounts, while decreases are shown as
positive amounts.
‰Level 3 cash instruments are frequently economically
hedged with level 1 and level 2 cash instruments and/or
level 1, level 2 or level 3 derivatives. Accordingly, gains or
losses that are reported in level 3 can be partially offset by
gains or losses attributable to level 1 or level 2 cash
instruments and/or level 1, level 2 or level 3 derivatives.
As a result, gains or losses included in the level 3
rollforward below do not necessarily represent the overall
impact on the firm’s results of operations, liquidity or
capital resources.
‰Purchases include both originations and secondary
market purchases.
‰Net unrealized gains/(losses) relate to instruments that
were still held at year-end.
‰For the year ended December 2015, the net realized and
unrealized gains on level 3 cash instrument assets of
$1.66 billion (reflecting $957 million of realized gains
and $701 million of unrealized gains) include gains/
(losses) of approximately $(142) million, $1.08 billion
and $718 million reported in “Market making,” “Other
principal transactions” and “Interest income,”
respectively.
‰For the year ended December 2014, the net realized and
unrealized gains on level 3 cash instrument assets of
$3.20 billion (reflecting $1.33 billion of realized gains
and $1.87 billion of unrealized gains) include gains of
approximately $247 million, $1.95 billion and
$1.00 billion reported in “Market making,” “Other
principal transactions” and “Interest income,”
respectively.
‰See “Level 3 Rollforward Commentary” below for an
explanation of the net unrealized gains/(losses) on level 3
cash instruments and the activity related to transfers into
and out of level 3.
134 Goldman Sachs 2015 Form 10-K