According to GAAP, the Pooling of Interest Method for Business

question 32

Multiple Choice

According to GAAP, the pooling of interest method for business combinations

• A) Is preferred to the purchase method.
• B) Is allowed for all new acquisitions.
• C) Is no longer allowed for business combinations after June 30, 2001.
• D) Is no longer allowed for business combinations after December 31, 2001.
• E) Is only allowed for large corporate mergers like Exxon and Mobil.

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Definitions:

MACRS

Modified Accelerated Cost Recovery System, a method of depreciation in the U.S. for tax purposes, allowing faster recovery of investments in certain property through depreciation deductions.

Depreciable Real Property

Real estate eligible for depreciation for tax purposes, meaning its cost can be deducted over a period of time.

Straight-Line Method

A method of calculating the depreciation of an asset that evenly spreads out its cost over its useful life.

Entertainment Expenses

Costs for business-related entertainment that may be partially deductible under certain conditions.