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Technology Stocks : Dell Technologies Inc.
DELL 137.59-2.3%10:35 AM EST
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To: Lee who wrote (153140)2/7/2000 4:09:00 PM
From: Chuzzlewit  Read Replies (1) of 176387
 
Lee,

OT -- Pooling vs. Purchase

There is yet another distortion due to pooling. Since assets are treated at historic prices after a pooling, the sale of an appreciated asset can make an illusory profit. For example, suppose a company is acquired under pooling, and that one of its businesses is worth considerably more than listed on the books. Shortly after the merger the new company decides to sell off that asset. Since the value of the asset at the time of the merger was not restated to reflect market value, the pooled company generates a profit on the sale. Under purchase method accounting there would be no profit.

TTFN,
CTC
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