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Strategies & Market Trends : Sonki's Links List
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To: Brian Malloy who wrote (336)2/7/2000 8:08:00 PM
From: Sonki   of 395
 
PFE / wla deal is based on pooling of interests.. Some notes on what and how of pooling vs. purchase. AOL/twx is purchase(?)
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pooling interests out to go soon. purc. acct is the one to be used in future.

goodwill = fair value of co - book value. in the purch. method goodwill is amortized over 30 -40 yrs. this will reduce the eps . that is is a disadvantage.
..

in the pooling goodwill is not used. only book values of two cos are used. so any big expense items are hit in a quarter and done away with. future e dilutions due to goodwill do not drag e down in any quarter. wcom/mci used pooling. all cos prefer this. but this is changing to purc. method.
in pooling exp. one time write off. purchase method goodwill is written off in 30 yrs diluting e.
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