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

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