The (Exit) Price of a Horse: Finding the Fair Value of an Unusual Nonfinancial Asset
Document Type
Article
Publication Date
2-2024
Publisher
American Accounting Association
Source Publication
Issues in Accounting Education
Source ISSN
0739-3172
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.
Recommended Citation
Altiero, Elizabeth C.; Libby, Theresa; and Olczak, Wioleta, "The (Exit) Price of a Horse: Finding the Fair Value of an Unusual Nonfinancial Asset" (2024). Accounting Faculty Research and Publications. 146.
https://epublications.marquette.edu/account_fac/146
Comments
Issues in Accounting Education, Vol. 39, No. 1 (February 2024). Publisher link.