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Enron's Business Practices: Analysis Of Mark-to-Market Accounting, Special Purpose Entities, And Stock Options.

9 Pages / 2,094 Words Published On: 23-02-2021

In addition,to other relevant articles,for assessment task part A, pleaseread thefollowing article written by Paul M. Healy and Krishna G. Palepu, the fall of Enron case study by Paul M. Healy and Krishna G and write a report that addresses the following issues:The Article is on Bb.

a) Define and explain mark-to-market accounting approach and give examples where Enron’s management / accountants perhaps misused this approach to portray a rosy picture of its performance / profitability?

b) What are special purpose entities and how Enron’s management used them to fund contracts or achieve financial reporting objectives?

c) Enron’s top management enjoyed high compensation/ remuneration including stock options, what was the main purpose of the stock options compensation scheme provided to top management. Your explanation, discussion and argument should principally be based on the assumption of the agency theory.

Describe and analyse the different ways that the five elements of financial elements, as defined in the International FRS conceptual framework, can be measured by listed companies. You are not constrained in this analysis to any one country or set of national accounting standards. Of course Australia is under International Financial Reporting Standards but your research could identify    examples    of    companies    operating    under    U.S.    GAAP    or    some    other regulations/guidelines that illustrate what you want to discuss. In completing this assignment, you are required to:

a) Quote  examples  of  measurement  methodologies  from  company’s  annual reports  andclearly reference your sources.

b) In explaining how a company has measured an element, explain how the measurement method provided decision-useful information and what you understand decision-useful information to be.

c) Provide a critical analysis of the techniques the selected company has used and why a technique deployed may be more useful or practical than another method. 


As  an  example,  two  (2)  techniques  have  been  appended  that  show  how  bond  liabilities  and interest expense  are reported and measured in Australia and the USA. The first technique is called  The  Effective  Interest  Method  and  the  other  is  called  the  Straight  Line  Method.  The Effective  Interest  Method  is  permitted  under  both  IFRS  and  US  GAAP.  The  Straight  Line method is only permitted under US GAAP. If you were writing on example on bond liabilities you could get into a discussion on these different techniques and whether one provides more decision useful information than the other. Or you may conclude that neither technique is verysatisfactory  and  the  bond  liability  should  be  reported  in  the  balance  sheet  at  market  value because if the company wanted to redeem the debt by buying back the securities in the open market it would have to pay fair value (and that would be based on a current trading price for the bond).

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My Assignment Help. (2021). Enron's Business Practices: Analysis Of Mark-to-Market Accounting, Special Purpose Entities, And Stock Options.. Retrieved from https://myassignmenthelp.com/free-samples/ha3011-advanced-financial-accounting/market-method.html.

"Enron's Business Practices: Analysis Of Mark-to-Market Accounting, Special Purpose Entities, And Stock Options.." My Assignment Help, 2021, https://myassignmenthelp.com/free-samples/ha3011-advanced-financial-accounting/market-method.html.

My Assignment Help (2021) Enron's Business Practices: Analysis Of Mark-to-Market Accounting, Special Purpose Entities, And Stock Options. [Online]. Available from: https://myassignmenthelp.com/free-samples/ha3011-advanced-financial-accounting/market-method.html
[Accessed 30 September 2023].

My Assignment Help. 'Enron's Business Practices: Analysis Of Mark-to-Market Accounting, Special Purpose Entities, And Stock Options.' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/ha3011-advanced-financial-accounting/market-method.html> accessed 30 September 2023.

My Assignment Help. Enron's Business Practices: Analysis Of Mark-to-Market Accounting, Special Purpose Entities, And Stock Options. [Internet]. My Assignment Help. 2021 [cited 30 September 2023]. Available from: https://myassignmenthelp.com/free-samples/ha3011-advanced-financial-accounting/market-method.html.


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