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Technology Stocks : The Learning Company (TLC)
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To: paul richards who wrote (6061)11/10/1998 12:18:00 PM
From: paul richards  Read Replies (3) of 6318
 
more info why pooling of interest is misleading investors:

1.Purchase vs. Pooling-of-Interest Accounting

Acquiring companies in a stock-for-stock transaction can sometimes circumvent the recording of
goodwill by making a pooling-of-interest election. Under pooling-of-interest accounting, the earnings,
assets, liabilities and equity of the two companies are simply added, as if they had always been one
company. The acquisition premium is never recorded, inflating combined ROE. Similarly, the
acquisition premium is never amortized (as in the case of goodwill), so reported earnings are higher.
Our survey, as the FASB presently proposes, restates all pooling-of-interest transactions as purchases,
thus recognizing goodwill.
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