pooling of interests

(redirected from Pooling of Interests Accounting)

Pooling of interests

An accounting method for reporting acquisitions accomplished through the use of equity. The combined assets of the merged entity are consolidated using book value, as opposed to the purchase method, which uses market value. The merging entities' financial results are combined as though the two entities have always been a single entity.

Pooling of Interests

A way to record a merger or acquisition where the assets and liabilities are added together and netted. The pooling of interests method does not create good will and therefore results in higher earnings for newly merged or acquired entity. The pooling of interest method contrasts with the purchase acquisition method.

pooling of interests

An accounting method for combining unchanged the assets, liabilities, and owners' equity of two firms after a merger or combination. Before being discontinued in 2001, pooling was a preferred method of accounting for mergers because it generally produced the highest earnings calculations for the surviving company. Compare purchase method.
References in periodicals archive ?
A major part of this controversy centered on whether to continue to require or permit pooling of interests accounting under Accounting Principles Board [APB] Opinion No.
As pooling of interests accounting evolved, many complexities and issues were introduced into structuring business combinations.
Absent evidence that a business combination did not entail a change in control, the Committee believes that pooling of interests accounting would allow preparers to ignore the costs of acquiring control in the subsequent accounting.
Those standards (SFAS 141 and 142) eliminated pooling of interests accounting and did away with amortization of goodwill, but required acquirers to appropriately allocate the purchase price to identifiable intangible assets.
He also includes a section discussing the intricacies of accounting for a business combination using pooling of interests accounting, and, lastly, a section reviewing various aspects of executive employment contracts.
The publicity surrounding these statements brings to mind the adage "watch what we do, not what we say." These statements are billed as eliminating pooling of interests accounting, a laudable goal.
said: "There has been no disproportionate surge in pooling transactions, no loosening of the qualifying rules, no hijacking of the pooling method by unscrupulous financiers," and, contrary to "...incorrigibly uninformed" media reports, "pooling of interests accounting is neither 'disreputable' nor 'ridiculous' nor 'very popular' nor 'sweetheart accounting.'"
Inc, making the most of what could be the final months of the pooling of interests accounting method, has snapped up another company; this time buying Online Anywhere for $80m in Yahoo stock.
What are the differences between purchase and pooling of interests accounting? Should the choice of accounting method be of concern to analysts, investors, or others interested in business activity?
It was noted previously that pooling of interests accounting normally results in higher--and often much higher--earnings than when purchase accounting is used.
114] states that "(the) elimination of pooling of interests accounting results in comparability in accounting for business combinations.
The most recent examples of this phenomenon are hearings and committee activity on the proposed standards dealing with business combinations and the elimination of pooling of interests accounting. The specter of direct government intervention in standards setting will always exist, but Leisenring perceives political pressure by special interests as generally ineffective.