Accounting Research BULLETINS
January, 1957 No. 48
Issued by the Committee on Accounting Procedure American Institute of
(Supersedes chapter 7(c) of Accounting Research Bulletin No. 43)
Certified Public Accountants 270 Madison Avenue, New York 16, N. Y.
1. Whenever two or more corporations are brought together, or combined, for the purpose of carrying on the previously conducted businesses, the accounting to give effect to the combination will vary depending largely upon whether an important part of the former own-ership is eliminated or whether substantially all of it is continued. This bulletin differentiates these two types of combinations, the first of which is designated herein as a purchase and the second as a pooling of interests, and indicates the nature of the accounting treatment appropriate to each type.
2. For accounting purposes, the distinction between a purchase and a pooling of interests is to be found in the attendant circumstances rather than in the designation of the transaction according to its legal form (such as a merger, an exchange of shares, a consolidation, or an issuance of stock for assets and businesses), or in the number of cor-porations which survive or emerge, or in other legal or tax considera-tions (such as the availability of surplus for dividends).
3. For accounting purposes, a purchase may be described as a business combination of two or more corporations in which an im-