Do you all think that there will be anything on the exam regarding these corporations and the accouting scandals that led to their demise? I don’t know if it’s worth it to memorize all of that, and I haven’t seen it tested much either in any practice material
All I remember is: Enron = barter transactions Sunbeam = bill and hold I’m not even 100% sure thats right though.
It was tested on the Level 2 BSAS practice exam this year.
^ You remember that because Schweser throws that in on every friggin Qbank test!!!
I hope it pays off too because I need to be compensated for knowing that useless tidbit.
what type of barter transactions did enron engage in? can someone drop in a one liner…?
That question, and the question given the direct quote, convert to indirect on currency translation. I get that every time
barter transactions with spe selling and buying the same stuff LOL
i think sunbeam was also taking huge writeoffs of future income and then future income looks fantastic. enron to me was SPE’s (VIE’s)… i’d forgotten the barter stuff… but good stuff too. ok, bill and hold on sunbeam as another already said.
cookie jars…anyone ? for sunbeam
i cant see cfa really asking us a question directly about enron/sunbeam… they would have to basically set up a seperate question not related to the vignette… like did enron do this… seems like a bad idea… i think we need to know what enron/ sunbeam did wrong, in order to detect in another co, which is how cfa should test it…
Conversely I hope there’s an entire item set on warning signs, enron and sunbeam, mixed with lashings of corporate governance - I’ve memorised the lot. Just don’t ask me to do Derivatives! That said my target today is to get through the videos with the jolly fat man.
There will be a question on Sunbeam/Enron, probably tacked onto the end of a vignette. LOS 28 h and i cover it, so i’m learning it.
i agree we have to learn it… but i just cant see the exam actually saying… did enron do this… seems not cfa like…
Some background reading on Wiki is amusing: "Under pressure to maintain the illusion, Skilling verbally attacked Wall Street Analyst Richard Grubman, who questioned Enron’s unusual accounting practice during a recorded conference call. When Grubman complained that Enron was the only company that could not release a balance sheet along with its earnings statements, Skilling replied “Well, thank you very much, we appreciate that . . . asshole.” Though the comment was met with dismay and astonishment by press and public, it became an inside joke among many Enron employees, mocking Grubman for his perceived meddling rather than Skilling’s lack of tact. When asked during trial in the street, Skilling wholeheartedly admitted that industrial dominance and abuse was a global problem: “Oh yes, yes sure, it is.”
Rent “Smartest Guys in the Room” for a study break the night before the exam. A it’s really interesting and B you will know everything you need to know about Enron
i will be pissed if it’s on the test. what is this a history test?
exactly… i cant see cfa testing this…it is stupid…
yes they may ask about shenanigans but I can’t imagine they’ll want to know something from a case study. Learn from it and apply it when something like this happens to a fictional company in the vignette.