Enron Corp. - University of California | Office of The President

Project Name Description Contract
Value
Cuiaba Integrated
Energy Project
A 480-megawatt, combined-cycle
natural gas power plant in Cuiabá,
Brazil.
Sarlux Power Project A 551-megawatt Sarlux combined
cycle gasification power plant on the
island of Sardinia in the
Mediterranean Sea.
Elektrocieplownia
Nowa Sarzyna
Project
Enron Piti Power
Project
A 116-megawatt power plant in
southeastern Poland, a natural
gas-fired, cogeneration plant.
Enron constructed an 80-megawatt
baseload, slow-speed diesel plant in
Piti, Guam under an Energy
Conversion Agreement with the Guam
Power Authority.
- 382 -
$400 million 1998
$550 million 1997
$120 million 1998
Date
Started
$110 million First half of
1997
578. Enron International accounted for its long-term construction contracts under the
percentage-of-completion method. The percentage-of-completion method recognizes income as
work progresses on the contract. The method is based on an estimate of the income earned to date,
less income recognized in earlier periods. Estimates of the degree of completion usually are based
on one of the following (See ARB No. 45, 4):
• The relationship of costs incurred to date to expected total costs for the contract.
• Other measures of progress toward completion, such as engineering estimates.
In addition, during the early stages of a contract, all or a portion of items such as material and
subcontract costs may be excluded if it appears that the results would produce a more meaningful
allocation of periodic income.
579. Enron's accounting for long-term construction projects was false and misleading,
resulting in an overstatement of revenues and earnings during the Class Period. Indeed, recognizing