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What is the difference between purchase and pooling accounting methods?
Wiki User
∙ 14y ago
1. In case of Pooling Accounting new balance sheet of the combined company is created whereas in case of Purchase Accounting no new balance sheet is prepared. The
purchasing company adds the assets of the acquired company to its balance sheet
using a fair market value.
2. In case of Pooling Accounting it is basically the merging of two companies whereas in
case of Purchase Accounting the acquired company is known as investment.
3. In case of Pooling Accounting 'who is buying whom' is not clearly stated whereas in
case of Purchase Accounting 'who is buying whom' is clearly stated.
4. In case of Pooling Accounting it didnot record the price the acquiring company has to
pay for the acquisition whereas in case of Purchase Accounting it is valued using the
fair market value.
Answer by,
Mr. Shabbir Alam
Wiki User
∙ 14y ago
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