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Of all future estimated revenues and costs profits

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Unformatted text preview: . Changes in market values are reported in the income statement for certain financial assets and in shareholders’ equity (component of Accumulated Other Comprehensive Income) for others Accumulated Gains often determined by proprietary formulas depending on many Gains assumptions about interest rate, customers, costs and prices— assumptions provides opportunities for management to create and manage provides earnings earnings Enron often recognized revenue at the time contracts (even private) Enron were signed based on net present value of all future estimated revenues and costs. Profits really tracked price of oil futures—almost perfectly correlated Profits © 2003, 2005 by the AICPA The Chewco SPE The Accounted for 80% of SPE restatement or $400 Accounted million million In 1993, Enron and the California Public In Employees Retirement System (CalPERS) formed a 50/50 partnership—Joint Energy Development Investments Limited (JEDI) Development In 1997, Enron bought out CalPERS’ interest in...
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