8I - Income Based Reserves - Purchase Accting Considerations

[Double High C]

How does the "Pooling" method work?

(around page 57? I don't have the note with me now.)

I read that one entity exchanges its voting shares for the voting shares of the other entity (or something like that). I don't see how this all hangs together.

Thanks in advance.

[In England]

I'm no expert, but I believe the thrust of the pooling method is that it is for merging companies and there is no goodwill to amortize.

No new assets are added or subtracted and there is no goodwill or intangible assets. The companies maintain their original accounting bases so equity is the sum of the two companies' equity.

The pooling method is not used for acquired companies so I don't think you can call it a purchasing accounting method. You would call it "pooling of interests accounting".

[nbd]

removed

[mayreeh]

I don't think that outdated material is a criteria that they use for the exam questions. --- They obviously don't use it as a criteria for reading material.

If they ask a question on it, I suspect that it will not go into much depth though. But if they ask for possible approaches on purchase or merger, they would probably expect to see it listed.