Magazine article American Banker

FASB to Hold Hearing amid Signs of Give on Pooling-of-Interests Ban

Magazine article American Banker

FASB to Hold Hearing amid Signs of Give on Pooling-of-Interests Ban

Article excerpt


Amid talk that a compromise is in the works, the Federal Accounting Standards Board will hold an open meeting April 12 on its controversial plan to eliminate pooling-of-interests accounting for mergers.

According to industry and government sources, FASB is considering ways to soften the impact its plan might have. For example, a modified form of pooling accounting may be retained, or the alternative method, purchase accounting, may be tweaked to make it more accommodating of goodwill. But sources warned that any compromise is still in the formative stages, and FASB officials refused to comment on concessions.

"No final decision has been made yet. It's a long process," said Kim Petrone, FASB's lead project manager of business combinations.

Still, banking industry representatives are heartened that FASB is listening to its critics.

"We hope that FASB will seriously consider retaining pooling or alternatively reconsidering the treatment of goodwill under purchase accounting," said Donna Fisher, director of tax and accounting for the American Bankers Association, on Thursday.

Under pooling-of-interests accounting, the book values of both companies are combined. Under the purchase method, the acquiring company takes a charge for the difference between the purchase price and the book value of the acquired company as an intangible asset, known as goodwill.

Since FASB's proposal was formally unveiled Sept. 9, the agency's board members have said pooling is confusing to investors, because it does not reflect the initial cost of the acquisition or the performance of the combined company over time. …

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