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  • November 2017 (Revised August 2018)
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Fair Value Accounting at Noble Group (A)

By: Siko Sikochi, Suraj Srinivasan and Quinn Pitcher
  • Format:Print
  • | Language:English
  • | Pages:22
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Abstract

Noble Group was a large commodities trader based in Hong Kong and listed on the Singapore Stock Exchange. In 2012, Noble shifted its business strategy towards an asset-light model. Under this model, Noble did not own mines or farms to produce commodities but built commodity sourcing capacity by working with and investing in producers in exchange for purchase and marketing contracts. Noble also worked with customers to secure supply contracts. Noble had a portfolio of 12,000 commodity contracts by the end of 2014. The contracts were measured at fair value. Iceberg Research, an anonymous blog, released a series of reports starting in February 2015 alleging that Noble was too aggressive in its fair value accounting for contracts and investments in producers. Iceberg did not accuse Noble of fraud but suggested that Noble’s profits and balance sheet were highly inflated and Noble was headed for disaster. The case explores Noble’s business and the valuation of its contracts.

Keywords

Fair Value Accounting; Policy; Goods and Commodities; Contracts; Valuation

Citation

Sikochi, Siko, Suraj Srinivasan, and Quinn Pitcher. "Fair Value Accounting at Noble Group (A)." Harvard Business School Case 118-034, November 2017. (Revised August 2018.)
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About The Authors

Anywhere Sikochi

Accounting and Management
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Suraj Srinivasan

Accounting and Management
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Related Work

    • January 2018 (Revised August 2018)
    • Faculty Research

    Fair Value Accounting at Noble Group (B)

    By: Siko Sikochi, Suraj Srinivasan and Quinn Pitcher
    • January 2018 (Revised March 2018)
    • Faculty Research

    Fair Value Accounting Controversy at Noble Group (A) and (B)

    By: Siko Sikochi and Suraj Srinivasan
    • November 2017 (Revised August 2018)
    • Faculty Research

    Fair Value Accounting at Noble Group (A)

    By: Siko Sikochi, Suraj Srinivasan and Quinn Pitcher
Related Work
  • Fair Value Accounting at Noble Group (B) By: Siko Sikochi, Suraj Srinivasan and Quinn Pitcher
  • Fair Value Accounting Controversy at Noble Group (A) and (B) By: Siko Sikochi and Suraj Srinivasan
  • Fair Value Accounting at Noble Group (A) By: Siko Sikochi, Suraj Srinivasan and Quinn Pitcher
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