26/09/2021 Intro to Accounting Stephen Clapham, 2020 Accounting Shenanigans 1 1 ‘The Smartest Guys in the Room’ Mark to market derivative contracts • No independent basis for valuing longer-dated contracts Mark-to- • In 2Q01 Enron reported $747m unrealised...
More
26/09/2021 Intro to Accounting Stephen Clapham, 2020 Accounting Shenanigans 1 1 ‘The Smartest Guys in the Room’ Mark to market derivative contracts • No independent basis for valuing longer-dated contracts Mark-to- • In 2Q01 Enron reported $747m unrealised gains versus $609m market EBITDA Off-Balance Sheet financing • Historic losses ‘buried’ in the Partnerships which Enron did not Off-Balance ‘legally’ control Sheet • Termination of Partnerships resulted in $1.2bn write-down financing Revenue recognition • Video on demand service to Blockbuster signed in 2000 • Enron recognised $110m expected lifetime profit of 20-year Revenue agreement up-front recognition 2 2 01 Intro 1
Less
