CALIFORNIA : BRIEFLY / FINANCIAL SERVICES : ‘Pooling of Interests’ Accounting Rule Due

Accounting regulators today will release a proposed rule eliminating “pooling of interests” accounting, which helps companies avoid charges against earnings when they make acquisitions. The Financial Accounting Standards Board’s proposal would force companies to, over a period of years, write off goodwill, the amount paid to buy a company in excess of its book value. Under pooling of interests, merging companies combine their books without writing off goodwill. The proposed rule is the centerpiece of the FASB’s plan to overhaul the way mergers are accounted for. If passed, elimination of pooling of interests is expected to take effect Jan. 1, 2001. Critics have said abolishing pooling of interests would reduce mergers because investors won’t support the large charges against earnings that companies would have to take.