Pooling of Interests

Under a pooling of interests, the assets of the acquiring and acquired firms are pooled, meaning that the balance sheets are just added together. Using our previous example, assume that Firm A buys Firm B by giving B's shareholders $18 million worth of common stock. The result is shown in Table 25.2.

The new firm is owned jointly by all the stockholders of the previously separate firms. The accounting is much simpler here; we just add the two old balance sheets together. The total assets are unchanged by the acquisition, and no goodwill account is created.

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