Enron - ENRON Once the seventh largest company in America,...

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ENRON Once   the   seventh   largest   company   in   America,   Enron   was   formed   in   1985   when  InterNorth Natural Gas acquired Houston Natural Gas. The company branched into many  non-energy-related fields over the next several years, including such areas as Internet  bandwidth, risk management, and weather derivatives (a type of weather insurance for  seasonal businesses). Although their core business remained in the transmission and  distribution   of   power,   their   phenomenal   growth   was   occurring   through   their   other  interests. Fortune Magazine selected Enron as "America's most innovative company" for  six straight years from 1996 to 2001. Then came the investigations into their complex  network of off-shore partnerships and accounting practices. In 1989, Enron started trading natural gas commodities and eventually became  the  world's largest buyer and seller of natural gas. In the early 1990s, Enron became the  nation's premier electricity marketer and pioneered the development of trading in such  commodities as weather derivatives, bandwidth, pulp, paper, and plastics. Enron invested  billions in its broadband unit and water and wastewater system management unit and in  hard assets overseas. In 2000, Enron reported $101 billion in revenue and a market  capitalization of $63 billion. In November 1999, Enron launched EnronOnline. Conceptualized by the company's  European Gas Trading team, it was the first web-based transaction system that allowed  buyers and sellers to buy, sell, and trade commodity products globally. It allowed users  to do business only with Enron. At its peak, over $6bn worth of commodities were  transacted through EnronOnline every day. EnronOnline went live on November 29, 1999. The site allowed Enron to transact with  participants in the global energy markets. The main commodities offered on Enron  Online were natural gas and electricity, although there were 500 other products including  credit derivatives, bankruptcy swaps, pulp, gas, plastics, paper, steel, metals, freight, and  TV commercial time. Enron Scandal
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The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the  Enron Corporation. The collapse of energy giant Enron is the largest bankruptcy and one  of the most shocking failures in United States corporate history Reasons of Default Enron violated GAAP, through  incorrect accounting for SPEs including failure to consolidate, selective use of the  equity method of accounting, and failure to eliminate the impact of transactions  among entities failure to provide complete disclosure unfair financial reporting
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This note was uploaded on 05/16/2011 for the course BUSINESS 246 taught by Professor John during the Spring '11 term at Goldsmiths.

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Enron - ENRON Once the seventh largest company in America,...

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