If a Company Uses Pooling-Of-Interests to Account for a Merger

question 42

Multiple Choice

If a company uses pooling-of-interests to account for a merger, which of the following are true?
I. Prior year's statements must be restated as if merged companies had always been one company.
II. Net income of combined companies will probably be lower than net income of two separate companies added together.
III. No goodwill will be recorded.
IV. Assets of acquired company will be recorded on acquirer's books at their fair value.

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

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