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    Accounting rules to prevent this from happening again

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    SPE's continue to have legitimate uses in business. Often they are used to isolate high risk projects from the rest of the corporation, or joint projects with other companies. The problem with the SPE's as the related to Enron and the like, is that they were being used to create fictional transactions to mislead investors as to company profitability. If these entities were properly consolidated then it would have washed out in the combination.

    The way they were able to get away without consolidation is that they didn't own a controlling interest, even though owned substantially all of the assets and risk of loss.

    What changes were made to accounting rules to prevent this from happening again?

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    Dear Student,

    Thank you for using BM.
    Below are my answers.

    Sincerely,
    Anna Liza Gaspar

    ANSWERS

    NOTE: In the OTA's own words in accordance with BM rules

    If you remember, special purpose vehicles, special purpose entities, variable ...

    Solution Summary

    The accounting rules to prevent SPE's from happening again are determined.

    $2.19

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