ADVANCED FINANCIAL ACCOUNTING. Accounting, Finance, SPSS Essay (Essay Sample)

PART A
Mark-to-market accounting is the measure of the current value of accounts that can change over time which involves recording the value of assets to reflect their current market levels. Its aim is to provide a realistic assessment of a company’s or institutions current financial situation. The annual financial statements of a company must reflect the current market value of its accounts.
Enron dealt mostly with long-term contracts and faced serious challenges in using mark-to-market accounting approach to estimate the value of these contracts. The estimation of the income was therefore done as the present value of the net future cash flows.
In its operations, Enron signed a 20-year agreement with Blockbuster Video in July 2000, to introduce entertainment on demand to multiple U.S cities by the year end. These included the pilot projects in Portland, Seattle and Salt Lake City that were created to stream movies to a few dozen apartments from servers set up in the basement. Based on these projects, an estimated profit of more than $110 million was recognized by Enron even though serious questions about its technical viability and market demand were still unanswered.