CASE 4-1: Bessrawl Corporation Reconciliation of net income from U.S. GAAP to IFRS 2011 Net Income according to U.S. GAAP attributable to equity holders of Bessrawl Corporation ………… $1‚000‚000.00 IFRS adjustments: Add: Reversal of inventory cost written down to replacement cost….. 10‚000.00 Less: Additional depreciation of building after 2011 revaluation……..
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REACTION PAPER – THE ENRON SCANDAL FACTS OF THE CASE Enron Corporation was formed in 1985‚ led by Kenneth Lay‚ as a result from the merger of Houston Natural Gas and Internorth that specializes in natural gases and commodities. In 1990‚ the company hires Jeffrey Skilling to lead the trading of commodities under deregulated market and Andrew Fastow later that year (USA Today‚ 2002). Deregulation of the energy markets allowed companies to place bets on future prices‚ and Enron was poised to take
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Case 1.1 - Enron Corporation ------------------------------------------------- Discussion 1 The parties we believe to be most at fault for the crisis in this case are a) the Audit Firm engaged in the Enron audit (Arthur Andersen); b) Enron Management (Kenneth Lay‚ Jeffrey Skilling‚ Andrew Fastow; and c) the SEC. The Public Accounting Firm: Arthur Andersen The auditor has the responsibility to evaluate the risk of material fraud‚ including: * Incentives and motives for fraud : Enron was a fast
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1. The “crisis of confidence” on the public accounting profession was not something that happened overnight and it is not the fault of one group of people or individuals. The accounting profession is partly to blame for this crisis‚ as the necessary rules‚ regulations and guidelines were not in place to hold companies and accounting firms responsible for their actions. The lack of regulations also allowed companies to partake in misleading transactions. These transactions were perfectly legal
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Enron: What Caused the Ethical Collapse? Andrew Rumsey Post University Enron: What Caused the Ethical Collapse? Enron‚ a Texas based energy company‚ has improved the way that electricity and natural gas is purchased ever since its inception in 1985 when its owner‚ Kenneth Lay‚ merged his original company called InterNorth with Houston Natural Gas Company. In addition to this‚ Enron’s growth was attributed to not only the U.S. congress deregulating the sale of natural gas but its selling of electricity
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4.1 Enron Corporation and Anderson‚ LLP ----Analyzing the fall of two Giants This case results in the publishing of Sarbanes-Oxley Act of 2002 and relevant to the Securities and Exchange Commission. Also‚ it is related to SAS 103: Auditing‚ Quality Control‚ and Independence Standards and Rules. [1] What were the business risk Enron faced‚ and how did those risks increase the likelihood if material misstatements in Enron’s financial statements? The business risks Enron faced are as following:
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Enron‚ what caused the ethical collapse? Q1. What led to the eventual collapse of Enron under Lay and Skilling? A1. There are many reasons‚ which led to the collapse of Enron. With the senior leadership of the company not holding/staying true to the company’s code of ethics‚ not enforcing many laws (which led to the company violating those laws). Therefore‚ the inability of the senior leadership to ensure that there are not only written practices as to how business should be done‚ but actually
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THE MERIT CORPORATION Family-owned and -operated for three generations‚ the Merit Corporation manufactured and sold children’s furniture. John Kirschner‚ Merit’s CEO and grandson of the company’s founder‚ was actively involved with every aspect of the firm’s operations. Now‚ as he was considering early retirement in the next few years‚ he began to think about his legacy for the future. Merit’s headquarters and the biggest of its three manufacturing plants were located in an industrial park 10 miles
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CASE 8-1: NORMAN CORPORATION 1. Answer: The transaction should be recognized based on the following points: i. ii. Conservatism concept stated that expenses should be recognized as soon as they are reasonably possible to occur. According to loss contingency‚ a liability is recognized when information available indicates that it is probable for a liability to occur and when the amount of loss can be reasonably estimated. Therefore‚ Norman should provide a provision for loss and recorded the transaction
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Case Study: Enron Corporation Accounting Scandal 1. What is Enron Scandal? Formed in 1985 from a merger of Houston Natural Gas and Internorth‚ Enron Corp. was the first nationwide natural gas pipeline network. Over time‚ the firm’s business focus shifted from the regulated transportation of natural gas to unregulated energy trading markets. The guiding principle seems to have been that there was more money to be made in buying and selling financial contracts linked to the value of energy
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