Message Font: Serif | Sans-Serif
No. of Recommendations: 5

In reference to the interview with Tom Gardner, a Motley Fool subscriber critiqued my comment that Enron inflated earnings by capitalizing (deferring) software expense. The member said, generally speaking, capitalizing software is the appropriate thing to do.

Most corporations who are not in the software business expense software expenditures on a current basis, rather than deferring them. Enron, in the year prior to its demise, incrementally capitalized a massive sum of software expense. The total amount was 10¢ a share, equal to nine percent of the company's reported $1.10 share earnings. This item alone was a major red flag that was missed by 99.9% of all of Enron's investors that read the corporation's annual report.

Thornton Oglove
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.