Date of Award


Degree Name

Master of Business Administration

Access Setting

Masters Thesis-Open Access



At the present time corporate business combinations are occurring frequently as they have in two previous periods of American history. The purpose of this study is to examine the two accounting methods which are now used to record business combinations and to study the consequences of having two methods for recording similar business combinations.

The criteria used to choose between the two accounting methods are examined. It is found that the criteria used are unacceptable for selecting one of the alternative methods.

An explanation of the principles involved in recording a combination as either a purchase or a pooling of interests is given in this study. A model is used to show the possible effects of choosing one method rather than the other.

On the basis of the differences which may exist in financial statements from choosing one method of recording a business combination rather than the other, both methods warrant careful examination to justify their continued use.

The writer concludes that the pooling of interests method as it now exists is unacceptable in most instances for recording business combinations. The method is not in accordance with accepted accounting practices because it ignores the economic nature of a business combination. In all but a few instances the purchase method is the only acceptable means of recording a business combination.

Included in

Business Commons