FASB Considers Changing `Pooling' Rule on Mergers
May 05, 2011
NEW YORK -- The body that sets U.S. accounting standards says it will consider changes to its merger rules that could restrict a practice allowing companies to report higher profits following combinations. The Financial Accounting Standards Board said Thursday it would re-examine its rules on accounting for business combinations and intangible assets. If one method, called pooling-of-interests, were narrowed or eliminated, some mergers might never get done. Pooling allows two companies to combine but not have to reduce profits to account for ``goodwill,'' the amount an acquirer pays for a company beyond the value of its assets. ``A great deal of disparity exists among the United States and other countries in the business combinations and intangibles area,'' FASB Chairman Denny R. Ong said in a statement. The FASB is a private foundation that sets accounting rules, enforced by the Securities and Exchange Commission. It said it was taking this on to ``harmonize U.S. standards with those of other countries'' to make reporting more comparable internationally.
