Enron free essay sample

To provide the students with a thorough and detailed understanding of the underlying concepts and accounting treatment of inter-corporate long-term investments (consolidations and business combinations). To introduce and discuss topics including foreign currency transactions, translating foreign operations, hedge accounting, not for profit accounting, interim and segmented reporting. To discuss and draw student’s attention to current developments within the accounting profession. Course Description:Reporting relevant financial information subsequent to long-term inter-corporate investments. The preparation of consolidated financial statements with emphasis on their economic substance rather than legal form. Texts:Modern Advanced Accounting in Canada, Hilton/Herauf, 5TH Edition C. I. C. A. Handbook Canadian Institute of Chartered Accountants (specific sections indicated on the syllabus) Evaluation: Final grades will be determined as follows: Mid-term exam 30% Final exam 70% Although the completion of weekly assignments does not factor into the final grade, their importance cannot be over emphasized. The lectures provide the basic knowledge and the assigned problems build on that knowledge. They did this through a very complex arrangement of SPES they called the Raptors, a group of entitles designed to both uffer Enrons earnings from mark-to-market write-downs and to pay millions of dollars toa handful of Enron executives and their friends The Raptors were established to cover their losses If the stocks In their start-up businesses fell. It was very clever, but wrong. In order for the Raptor to come through, the telecom industry had to perform outstanding, instead the telecom Industry begin to suffer Its first downturn, which caused Enron to suffer as well. Business analysts began trying to unravel the source of Enrons money. The Raptors would collapse if Enron stock fell below a certain point, because they were ultimately backed only by Enron stock. Accounting rules required an Independent Investor In order for a hedge to work, but Enron used one of their SPEs. When Enrons stock began to decline, the Raptors began to decline as well. The deals were so complex that no one could really determine what was legal and what wasnt. Eventually, the house of cards began falling. As Enron attempted to maintain its bad investments and then hedged them, and as the Enron stock supporting these oney-losing hedges dropped in value, the Raptors rapidly lost the credit capacity it needed to support further hedge activity, leading to Enrons tumble. Enron, at one time was the seventh-ranked company in the united States with stock trading as high as $80 per share In 1999, filed for bankruptcy protection on Dec. 2, 2001 and its stock became virtually worthless. It was a company recognized by everybody from Wall Street to government as the future way that American companies would be run.