How to solve

What is mark$-$to$-$market accounting?

a$.$ Hint: Use an example to demonstrate the type of accounting Enron was engaging in$.$ The following sequence of cash flows will be helpful. Assume a $10\%$ discount rate.

First, calculate the accounting income for each year $($i$.$e$.,$ use historical cost accounting$).$ Second, calculate the income using Enron's method $($i$.$e$.,$ fair value accounting$).$