Question: Exhibit 5.23 presents selected financial statement data for Enron Corporation for 1997, 1998, 1999, and 2000. These data reflect amounts from the financial statements as

Exhibit 5.23 presents selected financial statement data for Enron Corporation for 1997, 1998, 1999, and 2000. These data reflect amounts from the financial statements as originally reported for each year. In 2001, Enron restated its financial statements for earlier years because it reported several items beyond the limits of GAAP.

Required

a. Use Beneish’s earnings manipulation model to compute the probability that Enron engaged in earnings manipulation for 1998, 1999, and 2000.

b. Identify the major reasons for the changes in the probability of earnings manipulation during the three-year period.

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a 1998 Constant 4840 DSRI920206031260169720273 724 GMI52820273 173112027331260 26381 31260 494 AQI4041 5933 10657293501 4669 917023422 429 SGI8923126020273 1375 DEPI115480480 9170563563 10657 114 SAI1... View full answer

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