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- Title
The (Exit) Price of a Horse: Finding the Fair Value of an Unusual Nonfinancial Asset.
- Authors
Altiero, Elizabeth C.; Libby, Theresa; Olczak, Wioleta
- Abstract
Students are placed in the role of a new employee in the mergers and acquisitions division of a regional accounting firm performing due diligence on a potential acquisition target for their client. Their task is to determine the fair value of a group of unusual nonfinancial assets, the horses owned by the target company, an equine training business. Students evaluate the horse's highest and best use, identify market participant assumptions, create valuation models, determine the exit price, and perform a sensitivity analysis. Appendix A describes the equine industry and provides a source for many of the necessary valuation assumptions. This case study is complementary to cases where students calculate fair values in more traditional settings and is designed to push them outside their comfort zone while emphasizing that the same familiar concepts apply. The case is recommended for use in advanced financial accounting courses at the undergraduate or master's levels. JEL Classifications: M41.
- Subjects
FAIR value; PRICES; ACCOUNTING; MERGERS &; acquisitions; ACCOUNTING firms
- Publication
Issues in Accounting Education, 2024, Vol 39, Issue 1, p79
- ISSN
0739-3172
- Publication type
Article
- DOI
10.2308/ISSUES-2021-067