The Pooling of Interests Method of Accounting

question 58

Multiple Choice

The pooling of interests method of accounting:
I.creates an account called goodwill which is recorded on the balance sheet of the merged firm.
II.consists of simply combining the balance sheets of the acquiring and the target firm.
III.is currently the accounting method required by FASB for all cash acquisitions.
IV.recognizes the excess of the purchase price over the fair market value and records that excess as an asset of the acquiring firm.

• A)I only
• B)II only
• C)I and IV only
• D)II and III only
• E)I, II, and IV only

Recognize the importance of cost allocation methods, including the distinction between direct and indirect costs.

Grasp the methods for preparing departmental income statements and the role of service departments therein.

Learn the implications of departmental contribution to overhead and how it affects overall corporate finances.

Identify and understand the roles and responsibilities within organizational structures relevant to accounting and finance.

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