accounting for SPE

Enron’s SPE accounting Enron created SPE on its B/S and funded it with Enron stock in return for a N/P from the SPE. Can someone explain why the creation of an SPE is offset with an increase of common stock? it seems as if the creation of the SPE created Enron common stock out of thin air. step 1 (Enron) Investment in SPE DR Common Stock CR step 2 (Enron) N/R DR Investment in SPE CR step 2 (SPE) Investment in Enron DR N/P CR

nevermind. Enron issues new common stock. They then use said common stock to invest in the SPE (i.e. they give CS to the SPE in return for a note payable). This common stock is never issued to the general public. Collapse the journal entries to confirm this: Investment in SPE Common Stock N/R Investment in SPE is equivalent to: N/R Common Stock